Appreciate info on this board ... but puzzled by "stock splits" and "special dividends" threads? I don't find them mentioned in CPL news releases .... are they anticipations by savvy investors??
For awhile I thought special dividend had taken place ... broker acct was credited with a CPL dividend days before announced regular dividend date??
>>I doubt that CLP will split its stock. It is quite rare for REITS to split. Look at my REG which is now over 62, and I doubt that they are contemplating a split.<<
Usually it's not worth it for a stock to split until it gets past 80.
One of my reits, NXL, is "recycling capital", selling 900M worth of property and paying shareholders a $3 per share special distribution. It will be "tax efficient" (long term cap gain or ROC). Market reaction to the announcement was tepid. I sold a small portion of my shares on the announcement myself (as I see the recent selloff I kick myself for not selling more, but now I'm along for the ride, LOL)
Read the NXL press release details for a good study on special distributions...
As property values go up, it encourages overbuilding resulting in lower occupancies.
Rising interest rates cut overbuilding and bias toward higher rent increases. The flip side is that valuations drop in a higher rate environment. Collect more rent but less appreciation in value. IMHO, values are peaking. Would not establish new positions now.
"not a great time to be buying REITs"
Couldn't agree more . . . except for REITs like CLP who get most of their income from apartments. In a rising interest rate environment, they will see their rents go up, and eventually their distributions.
Taking that back...
Current Barrons Article mentions Boston Properties is doing a special dividend. Property prices are so extended that some REITs refuse to buy properties at these prices. If cann't do 1031 exchange because cann't find reasonably priced properties to buy, special dividend becomes a reasonable alternative.
Barron's article general tone is that REITs are overpriced, but other buyers of properties are still buying and driving up property prices further.
IMHO, not a great time to be buying REITs, but not neccesarily a good idea to sell since sale would involve a lot of taxes due for any long term holder.
A well run REIT should not generally produce taxable profit on sale of properties. It should set up a 1031 exchange to defer the tax. Only case to pay tax is if shrinking firm or sloppy management. Amount of money at stake enough that companies almost allways do this right.
Its a way to get rid of the excess profit instead of increasing the regular divvy and the pref divvy. The excess profit doesn't occur except under certain circumstances such as selling properties at a large profit without a place to put the money. Also as a REIT the co would have to pay income tax on this profit. This is sometimes called nonrecurring income.