Fireside chat = moderator asks planted questions. Was a great platform for Tylis to paint a very positive picture. Got more specifics than 11/1 cc.
Private equity: Expect to collect 800 million to 1 billion in 2014 with Healthcare and Income 2....does not include nontraded reits to be launched in partnership with pending NYC company deal.
NYC company = private real estate company which owns real estate and which manages real estate funds.
300 million investment is more debt than equity, expected to close before end of year. After close will launch (with NYC company as fee sharing partner) several new products including multi billion nontraded reits.
One reason name not released yet is NYC co wants to notify its investors of NRF buying an equity piece.
Private Equity deals: Expect significant p/e business in 2014. Tutes are calling NRF to discuss selling like 2 done deals or joining in investing in NRF structured deals. Moderator asked about proposed FINRA/SEC regulations on nontraded reits. Tylis: fine with NRF......complaints about other deals = lack of disclosure. NRF discloses like a public company so actually welcomes more disclosure regs. Moderator asked what they can do about "opaqueness" of p/e cash flows. NRF: we disclose all we can in the supplemental schedules included in quarterlies and sec filings. Realizations in 2 done deals have been higher than book.
NRF broker dealer has capacity to handle 4 offerings at same time.
Manufactured housing: Low risk, stable cash flow is reason. Cheap fixed rate debt....Tylis disclosed that their approx. 4% debt is assumable in a sale. Cap rates for mfg hsg about the same but debt rate 100 basis points higher than early 2013, so very pleased with what they have and are looking for more.
Question from audience. Capacity for more leverage (vs equity offering)? A = yes, nrf has capacity for more leverage. Translation: Can grow more before issuing more equity.
"Cap rates for mfg hsg about the same but debt rate 100 basis points higher than early 2013, so very pleased with what they have and are looking for more."
Dar, I'm not understanding that. It sounds like the margin has worsened. Unchanged cap rate means the cash flow capitalizes at the same value. OK. But, debt is 100 basis points higher. If the debt is more expensive, that only means the net cash flow stream has decreased. I'm missing something. I don't see this as a positive.
Tylis comment was more about how happy they are with the deals closed before rates went up. You are right. Same cap rate and more expensive debt = less profit on the leverage. No mention of pending deals mentioned in cc. Yup, they may take 13% on leveraged equity instead of 14%. I'd rather have 14 than 13 but 13 is still nicely accretive. As to payout, 75% x 13% = 9.75% which is more than we are now getting.
I am convinced that Hamo simply will not do a deal which is not accretive to his units which are the equivalent of common stock. Yes, Hamo sucks excessive compensation and bonuses, but he and his family are the largest individual shareholder. I trust Hamo to take care of Hamo which takes care of me.
In answer to audience question: Do not like stock price. Yield is higher than peers paying out 100% when nrf paying out 75%. If it doesn't change, will evaluate spinoff.
Just a lot more color than 11/1 cc. Growth still on track, especially in management fees and private equity deals.
Not a syllable in whole presentation which I consider negative. Nothing makes me even consider lightening up on a WAY overweight position. Will just wait for historical numbers to speak for themselves, quarter after quarter.