Wes talked about the potential for a large deal that would accelerate the transformation of Newcastle's balance sheet. During the Q & A, Wes referred to a possible deal with $150-200 million equity investment, which would give the senior living business sufficient "heft" to be a "standalone" business. So, no assurance any large deal will be consummated, but Wes's remarks show that management has loaded the elephant gun, and is open to doing a large deal that meets their ROI requirements. My thesis for owning this stock is the high dividend payout in combination with the future ultimate transformation of Newcastle into a "pure play" senior living REIT trading at a much lower dividend yield--ie, the potential for substantial stock price appreciation. There seems to be the possibility of a large deal in the near term which could accelerate the transformation of Newcastle into a "pure play" senior living REIT trading at a much higher multiple of FFO/share. Newcastle management has been quite successful in the past two years in realizing their vision for creating shareholder value. I feel management tends to set realistic goals, and then meets the goals they have set in a systematic fashion. So, at this point I will suspend my skepticism regarding the media business, and give management the benefit of the doubt, based on their performance over the last two years. Besides, there doesn't appear to be any premium priced into the stock suggesting shareholders have any confidence management will succeed in realizing its vision of transforming Newcastle into a "pure play" senior living REIT.
The same promises, lots of spinning wheels, less income, still a lot of uninvested capital, Wes Edens congratulating himself and his co-workers on a great quarter. It sounded like the stock will open way down to me.
Did you expect anything different this time. The tone was modest and Wes wasn't all that talkative. Still there is a positive future. But this is a big miss and they need to still improve on execution expectations. There is still growth and it will be slower than what they tells us but this is what I have come to realize. At least we see what book value is and they trade at a hedge fund multiple not a REIT. Maybe next year when the get the new media corp done they can focus on rolling cash from the CDO front to more senior living. But who knows maybe they will come out and say they see a great opportunity in trash compactors or paper shredders and go that direction. I see all this spin off jazz as noise. IMO I think they have no clue as to how much or how fast they can exit the CDO business. Or well getting paid to wait.