I was trying to figure out what effect the merger would have on shares outstanding, and it isn't pretty.
According to CLP's 10-Q, they have roughly 33 million common shares outstanding, and (if memory serves) they will issue between 11 and 14 million more common shares as a result of the merger. Shares outstansing increasing by 33%? OUCH!
I was thinking about getting into CLP (I have been familiar with this company for about 7 years), but I think I will wait 'til after the deal goes through.
Although the stock price is a bit too high for me. I enjoy watching the stock because the people on the Board and senior management are solid people. You'll be hard pressed to find a better group of people. However, I do believe that the outcome of the merger is still an unknown and I don't think we'll find out until its finished.
There is no dilution. This deal is accretive to CLP. CLP is paying $2.68 divvy per year. The merger is 4 shs TCR for each shr of CLP. TCR is paying .80 per year X 4= $3.20 @ 4 to 1. TCR shareholders will lose .52cts per year and CLP will gain .52cts per year. This is a great deal for CLP and a bad Deal for TCR shareholders of which I am one and I will vote against this merger as will many other TCR shareholders.
My notepad calculation shows the deal takes CLP's FFO from 3.65 down to 3.40 the first year. This does not look accretive for CLP and may explain why CLP share price took a hit. TCR shareholders are getting a good deal considering what they had "not going" for them. The whole premise is based on an assumption that the apartment sector is where the growth will be going forward. Good luck. On the bright side the new 79% payout will look good compared to other "apartment reits".