The seeking alpha transcript of the CC and the investor presentation slides are must reading for anyone serious about investing in nrf.
Hamo emphasizes the shift to equity reit income and management fees, especially from the nontraded reits which are selling very well.
Page 6 of the presentation slides estimates 43% of 2013 cad will come from equity reit investments and 16% from management fees, principally from Income 1. This page makes the case for a 6% yield for nrf using market yields for similar companies by asset class. From memory, the Feb presentation got to 7% using the same methodology, the difference being the larger role of equity reit investments. Management fees carry the highest multiple (lowest yield) because of their annuity-like stability. Equity reits are next. While not broken out in the presentation, cash flows from manufactured housing lot rentals is also rock solid stable. Slow growth for sure but like an annuity. I think when the market realizes the magnitude of the shift in nrf's cash flows to lower yield (higher multiple) cash flows from equity reits and management fees, the yield on nrf will come down due the priice going up to higher multiples for safer cash flows.
NRF making a live presentation to analysts (a spoonfeeding session) on the 13th, next Monday. The info is public now, but the market is slow. Now's your chance to ride Hamo's growth momo.
This is really quite significant. I thought of NRF as a mortgage reit on the comeback trail. I did not think of the transformation of the business. But, their mortgage past gives them a world of experience and relationships as they go about this transformation. They have it all under one roof. So, we get a twofer. Increased dividends and yield adjustment. You don't run across this everyday. Thankfully, some of us knew the company from of old and have taken a position before this run up. Now, we can just watch all of this unfold.
"I thought of NRF as a mortgage reit on the comeback trail. I did not think of the transformation of the business."
You are not alone. That's why, if you've got the bucks & guts, you should be adding up to position limit before the market starts thinking of nrf as an equity/annuity reit with a mortgage flavor. Too many watched the mortgage reit bad debts pile up during the crash. It takes some convincing to get them to think otherwise.
I don't know if nrf will get to 6% for a few quarters, so let's use 7%. This year's dividend will be 78 cents, imo. 78/7% = 11.14 price. If you annualize 19 cents to 76 cents, then 7% = 10.86. Once the market believes in "penney per quarter" it will capitalize and discount 94 cents for 2014 (22 + 23+ 24 + 25). 94/7% = 13.43.
Or, give hamo his 6% on 19 cents annualized. 76/6% = 12.67.
No matter how you slice the cake, the price is going up from here as more and more investors understand the morphing of nrf into much more of an annuity reit.