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CommonWealth Reit Message Board

  • bertttfarve bertttfarve Nov 17, 2011 2:11 PM Flag

    The Pyramid Scheme will end


    when CWH finally cuts the dividend to a sensible number. Your stock price will actually rise from $16.50 because of all the cash the company will save and therefore save the company from issuing more stock to pay the ridiculous dividend. Tell management now to get real abt the dividend. Call them, email them. do what you have to do

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    • CWH weighted average borrowing costs are nowhere near 3%, more like in the mid 5 range at least...I would go and check but it is late and I am not near my materials.

    • If cwh is borrowing at 3% and it is earning at 8% why isnt the CAD larger????? And if half of its portfolio is mortgage free-why isnt the CAD larger??????

      At the very least it must be buying using proforma numbers and plugging in rents for the vacant space to get their cap rates.

      When it does a tax free exchange and buys a similar sized or larger property then the new property takes on the basis of the traded property. If so, then the value of the acquired property is understated on the balance sheet and to the extent it is larger than the traded property,it should be generating a higher cash flow.

      If so-why is the CAD trending downward??????

      In any event if it goes to $14/share-I am interested as a speculation, a takeover candidate by rmr or on the hope that rmr will do the obvious thing and buy back shares. How can it not buyback shares with the current 12% dividend yield???????

    • Presumably RMR has scale with overhead and with a wide footprint you can better sniff undervalued opportunities since location is so important...Portnoy on his next slide show would be well served in comparing the overhead expense ratio to some of its peers...One extremely important thing that is very hard to know is unrealized property appreciation as that is not reflected on the balance sheet (and may not show up on the income statement in the short term either)...Corcoran can help us out with that.

      This is one argument for, I am not saying this has to be right.

    • My assumptions about the managers of virtually all corporations is that the insiders will focus on their interests first and then the shareholders interest.

      So it is best if the insiders best interests are in alignment with the shareholders best interests. If the interests are allinged then, the insiderss will have an advantage in terms of timeing-when the dividend will be increased,etc, etc.

      With cwh-rmr is in some many disparate businesses its interests may or may not be alligned with the shareholders or the execs are so stretched that they can only have full time focus on one or two businesses at a time.

    • The reason the stock market discounts the book value of CWH in the share price is precisely because of RMR I believe. The structure of that type of management is believed to misalign the interests of shareholders with those who manage ostensibly for the shareholders.

      I tend to agree with this analysis. On the other hand, even with inside management there is a similar problem. Lehman, Citicorp, Merrill Lynch got into fine trouble with management's incentives to maximize this quarter's reported profits with little consideration of long term consequences. I have not made up my mind if outside management is worse or not.

      My impression is that CWH is bargain priced now.

    • Assuming that the non-real estate assets are worth at or near 100% of the value shown on the balance sheet-in my quick and dirty analysis- I therefore assume that the difference between shareholders equity and the market cap is the extent to which the market thinks that the value of the real estate is overstated (or impaired).

      In cwhs case, the 3Q shareholders equity is $3.6B and the market cap is only $1.2B then the market cap suggests that the real estate assets are overvalued by $2.4B.

      Given that the depreciated value of the real esate is $6.3 B the market is discounting the depreciated value by some 38%. How can that be if rmr is as good as everyone seems to think it is?????????

      Or am I missing something??????

    • <<Given that fact, this may be a great entry point for buying cwh-especially given the 45-50% difference between the market cap and book value>>


      My biggest concern is why the price so far below book value. I have been researching those properties in my area (greater DC area)to get an idea as to what they are really worth today vs. what was paid. This would give me an understanding about their 'REAL' worth. My understanding of book value is very limited, but I assume it to be the purchase price minus or plus adjustments(?) at purchase.

      Stay tuned.

    • So I have finally perused the last 2 years of cwh financial statements.

      Certainly hasnt been a lack of activity on the sell and buy side. Very confusing.

      This morning I an idea on how to make heads or tails out of the mess. I pulled up the historical price data on a monthly basis for cwh, snh and gov-all of which are run by rmr. Since the over the last 5 Qs when all of the snh and gov transactions took place gov is still above its introductory price and very little has happened to snh. cwh, on the other hand has gone down 50%.

      Given that fact, this may be a great entry point for buying cwh-especially given the 45-50% difference between the market cap and book value. I am unsure of the upside potential but the downside protection looks attractive.

      It looks like the CAD is on a downward trajectory so IMO the dividend is at risk.

      This stock is now on my radar screen but I wont buy until there is more bad news.

      I buy only on exaggerated swings and will be a buyer at or around $14 purely as a speculation. And if cwh does another spinoff-I am definitely interested in the spinoff as a short to medium term play. Cwh can be a very good trading stock.

    • And END BADLY for all. You ever so right.

    • Boy, you really don't understand REITs or investing at all, do you?