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Waste Management, Inc. Message Board

  • uhuh24 uhuh24 Jan 28, 2013 11:38 AM Flag

    unfounded rumors

    WM cannot convert to a REIT as it is an operating business not a real estate or asset company. Its landfills have a short life and require over $1.billion/yr just to open new sites. REITS do not reinvest much they just milk existing assets. The other big problem is the landfills could be acquired by another company like Republic if separated and WM would be out of business as they would have no landfills. This whole thing makes no sense.

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    • don't know about the rumors. But your justification makes no sense. WM could spin off and still retain ownership interests to control REITs. REITS acquire and dispose of assets on a regular basis so landfills or office buildings really don't matter much. If you think REITS don't reinvest in their properties, you are just plain wrong. Well run REITS do reinvest when it makes economic sense to, they dispose of properties when it doesn't make economic sense to update them.

      • 3 Replies to jananjim
      • I think a rumor about spinning off the energy business would make more sense. Personally, I like the thought of an MLP based on landfill generated electricity. Waste Energy MLP would have an easier time expanding into non WM owned landfills etc .

      • So the question is what is the upside if they convert., If they keep .8B for capex at landfill, they could pay out almost $3.75/shr and with a 7% yield, price is $53. That is a lot of upside and downside is back to $34 and 4.25 yield. Good spec.

      • If they keep ownership interest, they would be conflicted on tipping fees. They only way to do it is with exclusive contracts with WM for fill. They would have to spin out completely and negotiate exclusive leases. Most REITS distribute 85% of EBITDAR or more. WM landfills require big investment ---unless they have 20 year capacity which we will have to ask on 2/13 conf call. I guess it is possible and these guys are plenty smart.

    • I am using this rumor to exit. There is a lot of pressure on WM by municipalities under financial stress and they cannot raise rates. Estimates are coming down. The housing cycle hardly effects them--it is more about just raising prices

    • Plus Carmer is full of it--his 60 second opinions are always horrible

44.31+0.03(+0.07%)Jul 24 4:06 PMEDT

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