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Senior Housing Properties (SNH) Message Board

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  • vickersviscount vickersviscount Dec 2, 2005 10:08 AM Flag

    12/1 announcement of common share sales

    Everyone has different investment goals. If you are here for long term income, then holding SNH is a good investment. I hold 2000 shares in our family trust, and I see no problem here. Adding 3.8 million shares is about 4.5% additional to outstand shares, so the price could drop that much, because they are diluting the shares. . .but, just noticed they are pricing at 18.90, above where it is trading. Paying off debt IS important - especially debt at above 7%. So I see this as a positive move for the long term. . .if you were here to make some quick money. . .not so good.

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    • A basic point that I would make about the share increase is that it does not cause NAV dilution. Also, the way I run the numbers there is not any net income or Operating Cash Flow dilution either.

      The negative lies in the fact that with increased shares outstanding it will be more challenging to increase net income and Free Cash Flow per in the future. This is the reason that I would not buy the stock or would sell it if I was so inclined.

      Disclosure: using Yahoo numbers and hurrying through lunch! Having had my lunch eaten before breakfast by this deal I continue to HOLD the shares with no further action anticipated.

      68,560,000 shares
      3,250,000 shares x 18.90=61,425,000
      x 5% expense
      71,810,000 shares 58,353,750 proceeds

      58,353,750 proceeds
      x7.875%
      = 4,595,358 savings

      Last 4qtrs net income 59,532,000 or .868
      adj. for transaction 64,127,000 or .893

      Last 4q Operating Cash Flow 1.53
      adj. for transaction 1.53

      NAV before transaction 12.66
      after transaction 12.90 +.24 or 1.90%

    • vickers-I certainly agree with you and am encouraged by the pricing.

 
SNH
22.25+0.72(+3.34%)Dec 17 4:01 PMEST

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