The difficulty is that they can't be very profitable in a low interest rate environment due to the contracting spread. However., they're expanding their SBA business.I think there's a deal on the table and due diligence is taking longer than expected. Perhaps the term sheet has changed with some contingency payouts.Holiday Inn franchises, which comprise the bulk of their business is still doing well and default rate is low. Perhaps we'll get closer to $14. Stock is cheap because you get paid 8% while you wait for the deal to go through. Thsi Company has been public for around 20 years. Enough already.
There's more to this Company than tangible value. They have the mechanism and relationships in place with the SBA to service these profitable loans. They should have some enterprise value in addition to the marked-to-market value of the loans on their books. The loans are the imputed asset on their books. They have a great history in minimizing non-performing loans and these are already discounted by 20% of their face value since the borrowers had to put down 20% plus additional collateral to get the loan in the first place. In summary, their book includes high quality loans in the low-end hospitality and car wash business. They are also minimally leveraged compared to similar businesses.The problem for them is that as a REIT they have had to pay out 90% of earnings and their portfolio is too small to warrant the overhead. So it seems that it's time that they fold their business into another company that has the infrastructure in place.
As a shareholder, here's my biggest concern. I can see from the profile listed on Yahoo that the CEO, CFO, and COO are pulling out a total of about $1.4M per year in salary. I haven't checked into the board of directors or any other exec. compensation, but is it necessarily in these guys' interests to sell the company and perhaps lose all of this annual salary?
Well, I don't know about getting that $14 tangible. A good bit of margin is probably being asked, assuming there is a takeover offer.
Meanwhile this morning, buyers tried to heel the trading. And they temporarily slowed the upward move. But most trades were coming across at market, thus it looks like trades may still test higher side today.
Why are you saying "I think there's a deal on the table and due diligence is taking longer than expected". Where is this information coming from? Can it be substantiated? Or are you just speculating due to the recent rise in the stock price?