until then there are other better purchases out there. I like how stable the dividend has been, no cuts. Also like that the CEO is invested in making sure that the dividend is not cut. love the 80% ROC, cuts my tax bills quite a bit, well defers it for a long time. :)
The premium has disappeared. That is all, usually CEFs trade at Discounts. This one has been trading at a premium for a while.
I doubt we will see much increase in the price of NRF. So when I recently increased my holdings by 10%, did it for the 9%+ dividend. Sit and hold.
NRF got panned in a NYtimes article about how shareholders were voting against crazy high executive compensations. 49.5% of NRF shareholders voted against Exec Compensation. IMO We will get results by voting against robber shares that Hamo & Co. are taking outright!
If I was in Glenn's place, this is what I would do.
Assume FFO of 90c for 2015
- Dividend 20c
- Use the other 70c to deleverage and buyback shares.
70c * 900 million shares = $630 million; at 40% debt, 60% equity, this would provide around a $1 billion of new acquisitions. Recycling some of the lower cap rate properties to buy up shares, or into higher cap rate acquisitions
If interest rates go up, ARCP could go into $8 or below. Considering that it is a discount to NAV, it makes total sense to start selling properties and buying up the shares.
a 20c dividend (would push a lot of people to sell), announcing a buyback authorisation of a $1 billion at the same time would allow the company to buy back shares accretively if prices fell too hard, too low.
there are almost 950 million shares outstanding.
to increase earnings by 1c, FFO has to increase by $9.5 million.
Cost of equity will probably be 6%. Cost of Debt probably 5%.
It's going to take a lot of acquisitions to move that FFO.
Or the cost of debt will have to drop quite a bit.
Or the amount of debt used vs. equity will need to increase.
All horrible options. Other than a quick rise to P/FFO commensurate with other NNN reits, there doesn't seem much hope for increasing FFO/share.
Does this seem a fair reading of the situation?
Sometimes Vanguard uses Futures to purchase shares when it is cheaper to do so than in the open market. I'm not exactly sure how it works, but that is what I heard many moons ago. There was some article about how Vanguard was actually beating it's indices before expenses (consistent positive tracking error.)