Merger agreement and 3.055 billion lending term sheet has been filed with the SEC.
If Griffin gets a better offer and terminates deal, it has to pay NRF 102 million. If nrf shareholders do not approve merger, nrf pays Griffin 35 million.
Borrowing good for 5 years. Looks like max fixed rate loan is 4.45%.
NRF can pay out no more than 100% of CAD as dividends without consent of Griffin.
Unless you die holding them. Then tax deferred becomes income tax free.
Many on this board have very low tax basis lots. When cumulative roc dividends exceed original cost the excess is a long term capital gain which can be offset by capital losses and otherwise would be taxed like a qualified dividend, both of which are much better than a nonqualified dividend.
No matter how you slice the cake, roc dividends are much better than nonqualified dividends.
Out of this lot at 16.9784 for an overnight 5.4%......another 4,356 for the Christmas fund. Griffin deal = blind luck, but I'll take it. I was playing for 50 cent dividend plus 20 cents on price....70 cents total in maybe two weeks. When blind luck hands me 87 cents overnight, I take it.
NRF will announce dividend after close today if history is an accurate guide. Will be 50 cents.
Griffin press release says "customary" dividends will be paid with proration to closing date. That guarantees 50 cents, imo.
NRF price way too low.........see comp healthcare reits in presentation slide.
Presentation slides on website.
NRF is borrowing all of cash portion....has commitment in hand.
This now less good for nsam and practically guarantees roc dividends for a few years from nrf.
Crazy market.....nsam traded over 20 per share on the RUMOR of a 3.7 billion griffin deal. Now it can't get over 19 on the FACT of a 4 billion deal.
Well, the bigshots' percentage ownership of nrf will decrease substantially with this griffin deal while their percentage ownership of nsam stays the same., meaning they own more of nsam than they own of nrf.
4.00 billion of gross deal minus 600 million of assumed debt = 3.40 billion to griffin shareholders, who get 11.50 per share which means about 295.652 million shares outstanding.
7.75 in cash x 295.652 million = 2.29 billion of cash needed.....debt and equity.
3.75 in stock x 295.652 million = 1.11 billion of new common......at 17.50 per share = 63.43 million shares needed.
Question for effect on nsam = how much of cash needed will be debt? With a 4 billion purchase at a 60% debt ratio = 2.4 billion of debt of which 600 million is already there to be assumed. If so, nef needs 1.8 billion in new debt. If so, 2.29 cash needed - 1.80 of new debt = 490 million of new equity needed.
Equity issued of 1.11 billion plus 490 million of new equity issued for cash = 1.6 billion of new equity x 1.5% for nsam = 24 million of new fees to nsam.
NRF gets bigger, safer, more diversified with no change in cad per share, meaning no growth on a per share basis while this deal alone adds 12% to nsam revenues.
Told ya the deck is stacked in nsam's favor. That does not mean it's a bad deal for nrf. The yield is wonderful and I am a yield incvestor. I love this deal.
This report is as of 6/30. If NRF bought any NSAM, it would have to be the when issued. Plus, it would not be a buyback which results in treasury shares or cancelled shares, it would be an asset (investment in affiliate).
I doubt such an investment was made prior to the close on 6/30. Less doubtful about now. Also don't know if sec filing is required for investing in an affiliate (other than 5% reporting threshold).
Regardless, I have no doubt about Hamo grinding his teeth over current prices. Question is, what is he going to do about it?
NSAM will not have an earnings release until Nov reporting qtr ending 9/30. Nevertheless, a press release announcing the board authorizing a buyback would not surprise me. IF....notice I say IF....nrf has a disclosure requirement about buying less than 5% of nsam stock, it would not surprise me to have nrf announce its board authorizing buying "X" dollars of nsam stock.
In for another lot at 16.1071. 50 cents = 3.1% x 4 = 12.4% annualized.
Come Nov, 35 or 36 cents = 8.69% or 8.94%. Time to switch preferred in retirement accounts to common.
You will not make the percentage return you would have had you switched when I recommended it in April 2012 when common yielded 10% while preferred was about 9%. With a long enough hold, preferred is a wasting asset due to inflation. The dividend will never go up and the price is capped due to the call at 25. Risk is about the same, imo, so why not reach for the reward?
NRF closed at 16.84 last Fri and at 16.28 today.....down 3.33%.
NSAM closed at 18.88 last Fri and at 17.78 today.....down 5.83%.
Combined, last Fri's close was 35.72 and today at 34.06.....down 4.65% for the week.
Momma told me there would be weeks like this.
Gotta put into perspective, though. 34.06 /2 = 17.03 on an old nrf basis. On 12/31/13 old nrf closed at 13.45. So, YTD we have 3.58 of share price appreciation (26.62% of 13.45) plus 50 cents of dividend (3.72% of 13.45).
Counting cash dividends, 3.58 + .50 = 4.08 total return / 13.45 = 30.33% total return with cash dividends. I ain't got no complaints, EXCEPT I don't think we would get swings like this if we had more communications from the company between earnings releases. It would be nice to know what they have accomplished, deal-wise, as they accomplish it.
Shiffman refused to give details to back up statement in acquisition press release that new portfolio would be 5 to 8% accretive to 2015 ffo (excluding transaction costs).
Midpoint 2014 affo = 3.45. Assume 3% organic growth for 2015 = 3.5535.
So an additional 5% = 17.77 cents
6% = 21.32 cents
7% = 24.87 cents
8% = 28.43 cents.
Assume a 50% payout ratio of the accretion (because debt on new deal higher than current balance sheet) and you get a dividend increase of between 8.88 cents and 14.22 cents.
Of course, the challenge is to actually produce 5 to 8% accretion when it takes synergistic assumptions of revenue increases and expense reductions to get up to the first year post-closing cap rate to 6%. I will bet the going-in cap rate is about 5% or a little bit more, a price which Hamamoto would (and probably did, imo) walk away from.
Nevertheless, seller bigshots are taking 34% of the price in sui equity (probably the only way they could get such a high price) and will end up with 11% of SUI....certainly not a token piece. SUI ends up much bigger, more diversified geographically, and more concentrated in the over 55 crowd where demographics guarantee demand.
Sooner or later.......probably later, the lazy market will figure it out.
Peru says to issue final permit for Southern Copper mine in daysBY Reuters
— 1:28 PM ET 07/31/2014
LIMA, July 31 (Reuters) - Peru said on Thursday it will issue the long-awaited environmental permit for Southern Copper Corp's (SCCO
) Tia Maria project by Monday, removing the final hurdle to construction on the stalled $1.4 billion project.
Deputy Mines Minister Guillermo Shinno said all questions about the company's environmental impact study for the project in Southern Peru have been answered satisfactorily and that an official approval is being written now.
Better late than never.
Yup, ya gotta be right twice in a row. Plus, ya don't get the dividend if ya don't hold the stock. Cash is a long term loser at today's interest rates. I don't even try to time the market.
But flippin is fun, so I bought another 5,000 nrf today at 16.1516 because I'm confident I'll soon get a 50 cent dividend. I don't mind holding this even at a 35 cent div, as that yields over 8% and I believe it will all be roc for 2014. My kind of yield.
Since my investment horizon is my grandchildren's retirement, I really like the ALL acquisition. Shiffman found a way to pay too high a price for diamond quality properties without killing the current dividend. Yup, he paid a big premium for premium properties, but manufactured housing is a "get rich slowly" business.
I really like the dominance of age-restricted and Florida as the retiring baby boomers make that a very safe bet.
I also like the additional geographic diversification away from the rust belt. This deal also makes the percentage of ffo from transient RV rentals much, much smaller. When the next recession hits and transient rv rentals drop like a rock, it will have a much smaller impact on sui's bottom line
Since I view SUI as a partially tax sheltered annuity, I really like this deal.
SUI under contract to buy the American Land Lease portfolio of mostly age-restricted mfg hsg communities for 1.32 billion, a price at which sui has to work undisclosed noi enhancements to get the cap rate to 6%, meaning to me a going-in cap rate in the low 5s........a very high price for diamond properties.
I suspect Hamo was at the table on this deal and walked over price......just could not make the numbers work with 1.5% of equity going to nsam.
Well, if you read and understood NRF's disclosure in the 10-Q on the effects of a 100 basis point increase in interest rates on net interest income, your opinion would be different. Since you have this opinion, you simply expose your ignorance and/or laziness.
Try something else to improve your short position.
I doubt we will see Healthcare or Manufactured Housing spun off for a long time. One of the requirements to get a tax free spinoff is you must hold a purchased business for at least 5 years. That rules out manufactured housing for another three years or so. I don't know how this rule works with components of the same business (healthcare properties). NRF has owned healthcare properties for as long as I can remember, which is more than 5 years. Yet they just bought a billion worth in May. I just don't know how the 5 yr rule works in such circumstances.
If the 5 year rule is a problem with the equity reit assets, the way to solve the problem is to spin off the mortgage reit business, leaving NRF nothing but an equity reit.
BTW, the management business did not have the 5 yr problem because it was not a purchased business. NRF started it from scratch, so it's exempt from the 5 yr rule.