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Alpine Global Premier Propertie Message Board

  • bluebuick2003 bluebuick2003 Oct 7, 2011 9:58 AM Flag

    why should i buy AWP ?

    after my blunder with the return since inception (see credibility post), i took a break for dinner and have come back with the following (i live in thailand now so i'm not typing this in the wee hours of the morning in the US).

    i can see there are some astute investors making comments back and forth here. i think real estate is a good investment going forward and it would be nice to have a good dialogue here. i'll try to avoid bashing alpine mgrs given my obvious negative bias.

    just a quick note about me. i was a banker, at times involved in real estate lending on large commerical projects (office, apartments, condos, retail centers and large single family developments, no hotel experience). i quit in april of 06 and have been managing my own money since that time to support myself (i'm single, no kids). i'm not an investment guru and i haven't hit any home runs. but i have managed to cover my expenses over the last five years with profits, dividends, and interest.

    i like to track the closed end funds to see if i can beat them. AWP is the only real estate fund that i follow and i really just started that in summer 2010. before i followed AOD, BOE, and ETO and found that i could beat their returns by just buying SPY. they rarely beat the SPY so i figured why not just buy the index. i write calls on SPY for addtl income. the same seems to be true for AWP, they can't beat the indices on their fact sheet so why not by some that do beat them.

    looking at the figures below, why is AWP a buy ? maybe i should be looking at it a different way, not sure.

    the numbers won't come out in great format when i post but i think you can follow it.

    this is from 4/26/07 (inception for awp) to june 30 this year.
    rwx rwr awp xawpx
    beg price 69 92 18 19
    end price 40 67 7 8
    profit/(loss) (29) (25) (10) (11)

    dividends 8 10 4 4

    total return -30% -17% -36% -35%

    this is from 6/30/11 to 9/30/11:

    rwx rwr awp xawpx
    beg price 40 67 7 8
    end price 32 57 5 6
    profit/(loss) (8) (11) (2) (2)

    dividends 0.31 0.5 0.15 0.15

    total return -19% -15% -24% -25%

    i know i can buy AWP at a discount to NAV (xawpx) but does that really matter if AWP underperforms both RWR and RWX in each of the periods noted above.

    doesn't the underperformance come down to stock picking ?

    i own RWR, RWX, PCL, CBG, HD, and BX in what i call my real estate basket. i know HD and BX are hybrids. i'd rather have HD as a play on homebuilders than own the homebuilder ETF (ITB). BX owns alot of real estate and i think they'll make some money on it in the future.

    RWR, PCL, and HD are my largest holdings at approx 10%, 5%, and 5% respectively (other than SPY which is 30% and cash which is also 30%)

    with that, i'd welcome any comments, suggestions, etc... on AWP or new buy suggestions in the real estate area.

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    • You mentioned that you are interested in new longs in real estate. Take a look at AHT, which is a hotel reit. It trades at exactly half of book value and pays a 5.5% dividend yield. They recently bought the 24 hotel portfolio of Highland Hospitality for a total of 128 hotels and are bringing the new hotels up to speed. Their hotels are a mix from Hampton Inn on the low end all the way to a single Ritz-Carlton, but most are Embassy Suites, Marriotts, Hiltons, Sheratons and other mid to upper-mid range US hotels. Like other Hotel REITs they have been beaten down on recession fears. Hotels are always the most sensitive to economic concerns, due to their ultra-short (one night) leases and hotel REITs will bounce back more than other REIT classes. AHT has a high but manageable debt load and yesterday they provided 3rd quarter AFFO (adjusted funds from operations) guidance of $0.36 to $0.40. If you take the midpoint of $0.38, AHT is currently trading an price/AFFO ratio of 4.8. In a normal economy, anything under 10 is cheap, but currently fear trumps greed. If the US experiences a deep recession, AHT will go much lower. If we have a moderate recession, the share price already reflects that probability. A more positive scenario would result in a much higher share price. Personally, I would hold out for $15-$20 a share.

      Disclosure: Own and adding to AWP and AHT

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