I will have a better Idea as to tax issues, if any, in the next few weeks once we get a couple of K-1's that are always mailed at the last moment. So far, neither our tax attorney, (who we have checked with a couple of months ago), nor our CPA, (who will be giving us the actual numbers), has indicated any concerns about what we have been doing for the past 30 years. This past year we finished selling a major investment in California R/E, (I hate doing any kind of business in California), and so if there are any issues, they should be fully resolved in the next couple of months. Thanks for following up on this issue.
As for the combined price of NRF and NSAM, I have no doubt that your $100 combined value will, if anything, conservative. When the combined price gets to $100, it will be a good time to take a trip to RI and take you and your wife out to dinner. However, lets do it in the Spring/Summer/Fall. I don't think that we could handle one of your winters if it is like this year's
Take care and again, thanks
raise to .41/share in May, (a $1.64 annual dividend), a person would receive a 9% yield if they bought at $18.22. The current price is 18.24 which makes buying more very tempting.
Should the dividend be during the year to a $1.66 annual dividend, (which is, IMO, probable), then a pps of $18.44 would result in a 9% yield which is better than the average return of the S&P. Add to this the price appreciation which is virtually certain as a result of being classified as a equity REIT and as a result of one or more "spin-offs" over the next few years and even my wife approves of increasing an already bloated position at today's prices.
The SA article makes some assumptions that I don't think are necessarily correct concerning increasing interest rates. The main one is that increasing rates = decreasing cash flow. First, one needs to be a little more specific as to what rates are increasing. If it is short term rates, then initially the effect will be, IMO, little impact on the cash flow because properties are purchased using longer term funds (5 -10 year) If the author is speaking about all rates increasing, then the above still holds true but with the benefit of having reduced new building resulting in existing properties having less competition from new properties leaving them able to increase rates as the economy improves. In other words, an increasing interest rate environment will, IMO have little negative impact on the performance of existing properties and if the cause of interest rates increasing is a growing economy, (as would be the case in the US), existing real estate should do well. It is new construction, IMO, that is most affected by rising rates, not existing properties.
As for NRF, I am in it for the long term because in real estate, IMO, the ones who make the most money are the either the very short term buyers and sellers, "flippers", or the long-term investors.
I think that the economy will continue to recover, and this recovery will be reflected in higher interest rates. However, I also believe that this same recovery will benefit equity REITs much more than the rising interest rates will negatively impact those REITs, at least for the next 5-10 years.
Wishing you the best
Thanks for the comment.
IMO, Information is not only fun but beneficial to have; and whether positive or negative and whether I agree or not. The key work is informationHowever, noise, (messages that lack any kind of thought or substance,) is, IMO, not only a waste of time to read but serves no useful purpose other than calling attention to the poster. Give reason, provide logic, contribute meaningfully to the discussion. The posters I am speaking of, like Magpies, take without contributing, they create noise and confusion but never give a reason or an argument to support their posts, and after they have had their attention, they fly away leaving white droppings for someone else to clean up.
Wishing you the best
I have been intrigued by some posters, to this and other message boards, who consistently post meaningful, substantive posts and by other posters who seemingly post only meaningless noise. The substantive posters contribute to the board and we are all better off because of their thoughtful, meaningful posts. The posters of noise however, share nothing of substance or of though. They seem to have a need for attention and so their posts are often emotional or alarming in nature, and always without any support or reasons for the post(s) being given. Much like Magpies, they create a lot of noise and create an atmosphere of confusion, alarm and self attention. The problem with such posters, just like Magpie, they tend to not only want to make a lot of noise in order to call attention to themselves, but they also have a negative impact on contributors who have meaningful contributions to be made. They mess up the MB. Therefore, I would urge others on this MB to freely use the "ignore" button for such posters and hopefully they will fly away to some other MB for their needed attention. By doing so, hopefully this message board will not only elevate the level of the contributions made, but will also encourage more serious investors/traders to participate through meaningful and thoughtful posts.
and your basis for your conclusion that "Nrf is the sequel to arcp" is....?
If we are to take you seriously, then we need to know the basis of you statement.
What is the basis of your 17.50 price prediction? I am sure many would appreciate you sharing it with us.
today was 0.66
NorthStar Realty Finance - Market Recap
Posted on 03/06/2015 by Peter Mankowitz
During the last trading session, a new 90-day call record for traded contracts was established. There were 1.5 calls traded for every put contract yielding a 0.66 put/call ratio.
Put/Call ratio is often used to measure investment sentiment, the ratio serves as a predictor of investor behavior. Unusual options volume provides reliable clues that the stock is expected to make a move. (see below)
Shares of NorthStar Realty Finance declined $0.36 (1.95%) to $18.09 in today's trading session. The price of NRF ranged between $18.03 - $18.50. Volume is 11.43M in relation to the three month average volume of 6.81M shares. The technical momentum Relative Strength Index indicator shows oversold conditions. NRF is trading above the fifty day moving average and higher than the two hundred day moving average. The stock's 52 week low is $15.95 and 52 week high is $35.86. Performance indicators show that the stock has gained 5.37% within the last quarter."
DEFINITION OF 'PUT-CALL RATIO'
A ratio of the trading volume of put options to call options. The put-call ratio has long been viewed as an indicator of investor sentiment in the markets. Times where the number of traded call options outpaces the number of traded put options would signal a bullish sentiment, and vice versa.
Technical traders have used the put call ratio for years as an indicator of the market. Most importantly, changes or swings in the ratio are seen as instances of great importance as this is commonly viewed as a change in the tide of overall market sentiment.
It would appear that NRF is over sold with a 0.66 Put to call ratio and we could expect a bounce in the next few days. Of course, I expect a bounce because Dar has a dinner trade riding in the works and he is seldom wrong when it comes to a dinner trade.
Here is a recommendation restated by Deutsche Bank that was posted on the IV message board today...
"Re: Deutsche Bank- the common thesis
NSAM and NRF are top two picks; Reiterate Buy
The last week has been busy for NRF, as the company announced its intention
to spin NorthStar Realty Europe (NRE), reported in line 4Q results, and priced a
secondary that could generate net proceeds of up to $1.25 billion if the entire
forward sale agreement and the shoe are exercised. We believe the spin of
NRE is the first of likely a handful of steps to unlock value for NRF
shareholders. Given potential future spins of other assets (healthcare, hotels,
manufactured housing, and/or mortgage assets), our expectation of inclusion
in the RMZ on May 12, and the attractive valuation relative to our target of
$22.50 per share, we are reiterating our Buy rating on NRF."
I keep adding to a position that has out preformed all of my other stocks over the past year. Over the past week, NRF is down but that is not true for the past year. If a person's time frame is minutes, hours, or days, I consider that person a trader and I recognize that they will view the short-term movements of the market quite differently than I do. However, I take a longer term approach and therefore look at NRF's performance over the past six months/year as being spectacular and I view the current weakness in share price as a buying opportunity, especially because NRF continues to preform.
A year ago NRF was trading at $15.45. Today the combined closing price for NRF and NSAM was $42.57. Adjusting for the 2:1 stock split last July, the equivalent value would be $21.285 for an increase of $5.835. Add an additional $1.00 in dividends (paid by both NRF and NSAM) and the increase is 6.835 which is a 44.24% increase. HARDLY A LOOSING POSITION.
(BTW: Last week NRF and NSAM both set new highs.)
This is history,but what is more important is the future and IMO,NRF's future has never been brighter however, I would welcome, as would many others on this board, hearing your reasons for stating that NRF is "A LOOSING POSITION".
Thank you in advance for your response
Thanks for your comments. I guess the real reasons that I posted a reply was first, I was frustrated that someone would be upset with the price performance of NRF over the past week. Given all that has happened, Quarterly and yearly reports, announcement of NFE spin-off, follow-on offering, and going ex-dividend, I was surprised that volatility was a surprise or concern to anyone and that someone would think that any drop in pps was anything other than temporary. After all, how many follow-on offerings has NRF had? I also reasoned that if one person was surprised/upset by the volatility, others might also have the same concern and just did not understand that whatever downward price pressure that resulted from the follow-on offering was not only temporary but represented a buying opportunity.
Finally, Although I did not have room in the original post, I wanted to point out that NRF could be a great vehicle for traders as you demonstrated with your latest, (and perhaps your most creative), "flip" that you allowed all of us to follow. IMO, the poster's problem is the same as many have, they want to be investors, (which requires a long-term time horizon), but they react like traders sacrificing long term investments because of short term emotions.
Again, thanks for your response.
First of all, let me apologize for starting a new thread, but Yahoo would not let me post a reply to the "Down a dollar thread posted by longtillthe30th.
During the past week, (from the close on Feb 25th to the open this morning, Mar. 5th), NRF has declined in price from $18.88 to 18.26, a decrease in price of 62 cents. Of that 62 cent decrease, 40 cents was caused by NRF going ex-dividend this morning leaving a decrease due to market factors of 22 cents. (Currently the market price for NRF is 18.43 which would make the weekly decline excluding the effects of ex-dividend of 5 cents). However, longtilthe30th's concern about the change in market price for NRF is a question that I would like to address at least partially:
First, all stocks have volatility, they go up and they go down, usually for various random reasons. That is why it is much more important to understand the reason(s) for the changes in price than the change itself.
Second, the primary reason that NRF declined in price this week was the follow-on offering of 60 million shares with ex-dividend being the secondary reason.
Third, the reason that NRF had the follow-on offering was in order to close on a Billion plus dollar purchase of a prime European office building portfolio enabling NRF to become a significant presence in the European office building market. (NRF also announced that NRE would be spun-off later this year). Without the additional equity, NRF would be unable to make this significant and accretive purchase. Follow-on offerings is a primary way REITs grow.
Forth, although the share price drop was result of the offering, it is this same offering that will allow NRF to continue to grow, to continue to increase earnings, and continue to increase both pps as well as dividends.
Finally, for me a time horizon of a week is the time horizon of a trader, not an investor. An investor with the time horizon of an trader is bound to be frustrated and ultimately will fail to realize full potential.
I would suspect that NRF (and affiliates) finance most of their real estate purchases through 5 and/or 10 year notes/mortgages and the effect of rising short term rates in their mREIT business has been anticipated and prepared for.
As to what rising 5/10 year rates might do, here are a couple of things to expect:
Increase the CAP (capitalization) rate thus reducing the value of the properties. This would be a negative for the book value of existing properties but a positive for acquisitions of existing properties since they would be less expensive to buy.
Decrease construction of new offices, hotels, medical facilities, rental housing, etc. This would be a negative for building new buildings but a positive for existing buildings since rental rates could then begin to rise.
There are other effects but in general, as long as the rise in interest rates is a result of a healthier economy, as as long as the changes in interest rates are gradual, IMO the over-all effect will be positive. That is why the stock market in the past has often reacted positively when interest rates rise. This positive reaction is not because interest rates were rising (as some on TV would lead their listeners to believe), but both the stock market and interest rates rose together because the economy was improving. Real Estate does very well in a healthy economy and so I don't think that the issue is so much what will happen during rising rates, but rather why are rates rising and if it is because the economy is improving, GREAT
I fully acknowledge that the "recovery" has been slow and uneven, however, over all, IMO, we are as a country/economy better off than we were at this time last year and certainly better off than we were before last year.
I also fully agree that there will be more worrying about rising rates than the real impact will be. I remember a poster about a month ago was wondering what would happen at the end of QE III. The poster was apparently unaware that QEIII had ended last October, but what struck me was that even today I really can't tell you what happened as a result of QE III ending. It was for me a real non-event. I think that the rising of short term rates will initially be blown out of proportion and there well may be a psychological effect but the real effect will, IMO, be quite limited. I also agree with you that although short term rates may begin to rise, the rise will be small and rates will remain low for an extended period of time. This is especially true with the dollar strengthening along with out economy.
Wishing you the best.