Iner2512, you said above:
"BTW, I saw no clear statements re future dividend rates...I get a combined projected CAD of $1.15 (NRF $.82 plus NSAM $.33). Using the NRF projected 89% of CAD dividend payout rate for both entities gives me a combined payout of $1.02, barely above NRF's current rate of $1.00. That tells me they are counting on the market awarding NSAM a higher PE multiple but without penalizing the new NRF. I can't see that happening immediately, and I can afford to wait for the market to react post-spin."
NRF yields 6% today. What is an appropriate yield post spin? If 6%, then for folks holding for yield, new NRF is no worse than old NRF. The new NRF will still be attractive to REIT investors, presumably.
Yes, NSAM will get a higher multiple. A 20 multiple is likely a reasonable mutliple for an asset manager, though NRF estimates use a higher multiple. Put together a 6% yield on new NRF and a 20 multiple on NSAM, and you should have about a 15% gain from today's price. As dar has said, the potential for significant upside rests more in NSAM. It can trade at multiples far beyond a reit yield.
The market does like to see actual numbers instead of projected. Will there be some volatility and uncertainty until actual numbers get reported? Certainly.
As NSAM reports actual numbers and raises capital for NRF and the sponsored companies and invests it, CAD should grow by a not trivial amount. Rising CAD, rising multiples could well happen.
Attitude has nothing to do with profits. Dar has quite the attitude at times too, you know.
David, NRF just split into two companies. NRF is a traditional REIT. NSAM is a management company which manages NRF and raises money for and manages non traded reits. The reverse split was part and parcel of the separation into two companies. By acquisition do you mean the rumored acquisition by NRF of Griffin? There are threads on that if you look. Mor do you mean the non-rumored acquisition of...well, I do not want to speculate on a target.
NSAM is a highly valued high growth company, with all that entails. NRF is a high yielding reit. Neither have reported results as standalone entities yet. Wait another quarter.
This is all a simplification, but enough to get you started.
Or a market that assigned a high multiple to NSAM fully anticipating deals such as Griffin, which would bring the multiple down. Multiples are usually forward looking - high ones anticipating growth, low ones anticipating lack of growth or declines. Did you not expect NSAM/NRF to have significant growth in assets in the first year following the spin-off?
The real question is what NSAM's growth profile looks like 1-2 years from now, to determine what multiple NSAM should sell at in the future based on the increased earnings. That is likely dependent upon macro factors which are very difficult (for me) to predict, but at present are aligned to make the NSAM/NRF model work very well...for now.
I am not that concerned about logistics. Symbols are reserved well in advance, and likely the when issued symbols as well. I suspect they are already in the system and can be activated quickly if needed - not in the middle of the trading day, but surely overnight.
The spinoffs/recaps/exchanges that I have owned have often violated the normal ex, record dates. Share transfer is electronic, primarily, so a computer record - and they should be able to do that quickly if the involved entities are the electronic powerhouses they would have us believe they are and they have all their ducks lined up for a one-off transaction.
But, like dar, I really do not know the logistics.
I would be more concerned about SEC effectiveness delays, but I suspect that is not in the cards.
illuminati, a simple way to prove this is to take the $454mm and allocate out how much goes to NRF (82 cents midpoint times 395mm shs). Gives you a dollar total. Divide that by the number of NRF shares outstanding now (half of 395). Do the same with NSAM (33 cents midpoint). You will get illuminated.
We all make mistakes, no biggie.
You could go read the information NRF's website regarding allocation of basis. Investor relations, under the link NSAM spinoff.
I noted that it is expected to be accretive nicely next year. Have been busy and not looked at latest earnings - for anybody! Will do so soon.
Grandchildren's retirement? Did you read the 8-k the other day?
My understanding was he founded the Whitehall real estate activities at Goldman. Whitehall ultimately failed and has been shut down. However, I believe it faltered well after he left. Anyone who knows the history of Whitehall, chime in!.
By the fundamentals, NRF should achieve pretty darn good returns with significantly less risk than NSAM. NSAM has the potential to achieve higher returns, but the factors that will allow them to do so are much more outside of NSAM's control, in my opinion.
I think everyone understood that I was referencing the SA article.
People pay attention to Cramer/The Street articles? Not me. Booyah!
ki1gore, I think you are right on pretty much all your points. I do not see another way to end some of the challenges inherent in the compensation grab.
Much compensation comes via stock options. One thought I have had is that companies should not be allowed to buy back stock. Dilution then, is forever. That ever rising share count would get attention quickly. The excess cash can be returned through dividends. Nothing so horrible about that. It would certainly instill more discipline in companies issuing stock in acquisitions or to management.
Might not be a bad idea to sit out flipping, but the last Russell rebalancing that impacted one of my stocks was a complete non-event. The volume of activity in the rebalancing as a percent of the float dwarfed that of NRF. There was one difference, so it might not be a great analogy, but it is what I got! A lot of sound and fury signifying nothing.
Like the spinoff, it all happened like magic at the close (there was a few price moves in the last few minutes on very small volumes, then a last price move seconds before the close on a 100 share trade to "paint" the close) then an avalanche of trades at the same price. They were all reported after the close, but they were not, they were just reported as such. Fixed the next day. Everybody thought it was a corporate event, folks in the know...just prearranged rebalancing trades. Here people will think it spin related.
While his logic was flawed, his headline conclusion - that NSAM is no massive bargain, was spot on. 30x forward cad is no bargain valuation. That does not mean NSAM is not a money machine, nor does it mean the price will not go up.
I am fully aware of the power of incentives.
If you believe there is less risk that NSAM will earn double the rate of total return of NRF - you logically would sell ALL of your NRF and put the proceeds into NSAM. I am guessing you have not done that.
In any event, I want both to do well, and - for the time being - own some of each.
Maybe it is slow and lazy, but maybe not.
It was pretty clear that NSAM would have substantial growth. Conditions - at present - are perfect for NSAM/NRF strategy. Hamo is a smart guy. Put the two together and future significant growth, for now, was baked in.
That begs the question - is a 29 forward pe based on NSAM's projected CAD, or is it really a lower forward pe based on next year/run rate in 6-12 months CAD? If CAD next year is $1, then NSAM is at 20x. The market may well have already paid for the initial upcoming growth, thinking it somewhat in the bag, and significant stock movement is dependent upon the further out growth profile.
As you are no doubt well aware, high pe's predicated on growth and growth well into the future, introduce a fair amount of risk into an investment. There are some very macro conditions that are working in NSAM's favor, for now. Perhaps for a long time.
In a couple of years, NSAM may well be up substantially, but it may be more predicated on growth expectations for 2016/2017, than for 2014/2015.
Just adding some food for thought. I very much agree you have to run numbers and connect the dots. And I agree that the market is ill informed and often overlooks info until they are hit on the head with it.
I don't believe IRS code or regs require a specific method of determining FMV. Close, open, avg of low and high, vwap, maybe even close of WI trading...all are valid. Some companies report all and let you choose. Now with broker reporting to the IRS of gains and losses, the practical approach is to follow your broker UNLESS the broker makes a mistake or the difference is significant and you are prepared to justify your position to the IRS.
In the 1st qtr conference call, mgmt was asked about the August dividend. The answer? We are still evaluating. I do not recall it being addressed in the spinoff presentation either.
It is *possible* the new NRF will pay only the dividend which they expect to sustain. I doubt the reit tax laws would force the full 50 cents, but I have not looked. The more compelling reason for NRF to pay a 50 cent dividend in August is that mgmt owns stock, and wants their full 50 cents! It is a small amount, but there is no end to greed. Rarely are even the richest folks willing to pass up $25k or $50k or $100k.
The acquisition looks very positive to me. Geographic overlap. Same mgmt software used. Sellers going on board and taking big equity stake. Refinancing opportunities. Term loan committed so that line of credit flexibility is retained somewhat.
I like that SUI has identified addl 14 properties for sale. Can't grow like they have without reallocating capital. Note that the accretion does include issuing another $100-$200mm in equity.
My calcs estimated a dividend of $2.68-$2.72-$2.76 - 8 to 16 cent increase. I suspect it will be 8-12 cents, rather than 16. Timing of increase depends upon a number of things.