It appears we are paying “purchase price consists of $127.8 million in cash and the assumption of $173.4 million Subordinated HSH Participating Loan” for “Ten vessels with FMV of approximately $218 million”.
Am I missing something or are we overpaying? Can't see than NM would overpay, but I read it that way.
I emailed them and their investor relations called me back. It does seem to be a well structured deal with little risk, guaranteed ROI for doing the work. Navios also gets 20% of the upside on rates or ship sales, plus the ability to outright own the ships later. The person called it "being paid to have an option on the 10 vessels".
Now that the mortgage business has stabilized and is in fact adding to profits now, I think you see ORI get rerated higher. It is about 25% cheaper than peers based on many metrics and historical valuations, so it should move to in-line, I think this year.
Plus, it will have no problem increasing it's dividend again maintaining its dividend aristocrat status and people are still hunting for income with the low bond yields available.
Still #9 highest yield on the list of dividend champions and dividend easily covered, growing book value. Most of the other yield-type insurance companies have moved back to higher valuations, so ORI will get there. Maybe it's still a bit messy for some investors to get into.