preferred is rock solid--now lots of equity. Yields will move down to 7% making D preferred $23.10. Common is also now a great buy at 8.3% yield. Divvy well covered at $.84 of FFO and 4.50 divvy. Stock will go right back to $25.50 after this institutional churning.
The lack of progress on federal budget negotiations could lead to severe disruption of financial markets. There was a need for additional equity to fund acquistions to likely maintain CWHs investment grade credit rating. In essence, the timing of this issuance could be appropriately called..."battening the hatches".
Assuming that cwh can sell wall street on a $24/sh price-the yield on the common would be 8.33%.
I guess that it isnt in the position to secure mortgages on their recently purchased gems.
Why not-is rmr too focused on acquisitions to devote time to management activities? Seems like Reit Management and Research-RMR is a one man management and research team and well worth the $60m+ (soon to be $70m+) fee paid each year.
Sooo many business's. Soo much money being made. Seems like some people are winners and some are losers.
Good luck. Keep thinking. If you remain a zombie and stay in this stock- dont be surprised if you get hurt.
I posted this just a short while ago, and it seems to have disappeared into a black hole. Apologies if it appears twice.
Management once again shows its disingenuousness in its statements during conference calls.
From the 5/6/2011 conference call:
"John Guinee - Stifel Nicolaus: Then the third question is historically, whenever you've gotten above 49% or 50% debt to total book capitalization, you go back to the equity markets. This time do you think you'll do preferred or you think you'll do common?
Adam D. Portnoy - Managing Trustee and President: It's a good question. I can tell you that we have a lot – you can do the math and you've done the math, we have – if we close on everything in the pipeline just on our revolver loan, it will be between about $550 million and $600 million, out on a $750 million revolver. We probably would look to do some refinancing of that later this year. We have lots of options. I point you to the fact that we also own just under 10 million shares of GOV, that's a possible source of liquidity for the Company. I'll point you to the fact that we are selling some properties and we may be selling more properties as the year goes on, and I think that we would – I don’t take equity off the table, but I obviously look at where our common stock price is and don’t feel great about issuing equity at this price, but obviously I don’t rule out anything, but in the talk about preferred, it’s something that I think it's something that we would look at. It’s something we probably look at doing before we would think about common, but I can’t guarantee we would do it before we would do common, but I agree that preferred is probably higher up the list of things we would consider before we would do common, yes."
The closing price of the common on 5/6/2011 was 26.05
It's no wonder that Wall Street hates this company (aside from the investment banks, of course).