Well, it all starts with the type of deal that the issuer has sold. In the case of Scheduled/Scheduled or Scheduled/Actual the servicer is on the hook for advancing any delinquent scheduled payments over to the investor. Since servicer advances are very capital intensive, most servicers will set up an advance facility structure which is where the money is coming from to pay the investor. The income that is generated to pay for the facility comes out of the servicing fee paid to the servicer which is why it is in the best interest of the servicer to lower outstanding advances.
Hi Bob - I'm still following this until the Q2 numbers are released and will be making a determination to hold or dump then. Only have 3000 shares left after dumping half as I was disappointed with the poor Q1 numbers and the lack of a Q2 dividend as promised in prior press releases. As with any stock I hold, if management fails to deliver on their statements, I move on. If it wasn't for the prior track record from NCT, I would have sold everything after the Q1 numbers.
If your cost basis is zero like me in NCT, you will have a capital gains tax to pay on the spun-off entity. Section 355 of the IRS tax code dictates that the subsidiary must be in operation for at least 5 years for it to be a non-taxable event. It sucks - we got hit with a 2.40 ordinary dividend on NRZ and the stock is below the cost basis of 6.89. I don't expect the same situation with NCT as the E&P will be much less due to the equity REIT nature of the spun entity but you'll still have to pay LTCG on it.
Well, the way the press release was worded, it didn't implicitly call out that they were acquiring new properties, but you could make an inference that it was the case. If we don't see any acquisitions before the "after" Q2 dividend is announced I'll liquidate this position. So when I say I'm disappointed, it means I'm a seller or about to sell some, if not all.
It's in the investor presentation on page 13. Looks like in Q3 if the SEC approves the spin-off. Since this is their 3rd time around doing this in the last year, I would imagine they should hit their timeline.
The problem is when you have a zero cost basis in NCT, the split will cause you to have long term capital gains tax on the FMV of the spun off entity - 20% LTCG plus the great 3.8% Obamacare tax. Hopefully there is some appreciation of SNR so I don't have to liquidate 23.8% of the position to pay Uncle Sam.
I read through the documents at EDGAR. It's a taxable event just like the last 2 spin-offs.
Wally - I really hope it's the case that this is a non-taxable event as I was planning on holding the senior living piece for the long term. If it isn't then I'll have to sell a significant portion to cover taxes since I have a zero cost basis in NCT. I don't have a good feeling about it though since the IRS regulation (section 355) dictates that the subsidiary has to be in business for at least 5 years to be a non-taxable event.
My point on the dividend increase was I understand the lumpiness of the trading, but they should at least throw investors a bone to increase the share price for when/if they do their next offering. What this tells us here is that the last offering probably needs to be put to work for a full quarter and they couldn't increase the sustainable dividend yet. However, they must have done a bang up job on their non-agency trading or the NPL business in Q2.
Anyhow, I look at it as positive news. GLTA
I was on the call today - not much news beyond the presentation. One of the analysts pressed Wes on the EPS split between the spin and the existing company and made a point that they will be discussing the details on the Q2 CC. Another one asked about the 300+ million in new senior living assets under contract and they said they would fund it through existing cash on hand and some options they had - noted not an equity raise. I was happy to hear that as raising equity at these very low prices to buy senior living assets wouldn't be ideal.
Basically, book value is at $5.00 so after 10% of the $5.00 (50 cents) the manager is entitled to the incentive fee of 25% of FFO and gains on sale. It is a bit excessive as compared to other management contracts I've seen.
Bob - I hope you are right on the servicing assets. I'm not fond of the non-agency trading they've been doing because of the lumpy and sporadic nature of the cashflows. I believe this to be the reason the yield on the stock hasn't compressed into the 7-9% range.
I was happy when NSM didn't win the Ally book of business because the economics of the deal just did not work at the 3+ billion price that OCN and WAC paid. At any rate, it's been awfully quiet and hopefully there are some deals in the works.
I sure hope they increase the dividend, even if it's just half a cent. If they don't, that means we've gone an entire year without a dividend raise while management has gotten some pretty decent incentive fees over the last few quarters. I'm going to have to dig through the 10Q and look at the incentive fees again. Even HLSS (closest comp) has raised its dividend twice over the same period. I don't want to discount the special dividend at the end of the year, but the EPS-lumpy non-agency buy/sell business has a finite life.
Right on schedule as compared to last quarter - after the close on Friday. I suspect the dividend will probably stay at 10 cents for the rest of the year as the CDOs de-leverage and the cash is put to work in senior living facilities. Since the initial run rate on the senior living is a bit lower than the cashflow from the CDOs, it will take a bit to ramp up. Hopefully during that time we experience a multiple expansion based on the composition of assets as 8% is way too high as typical comps in the senior living space. I'll take the 8% as we wait.
Did I read that correctly in the press release? They plan on paying a dividend AFTER Q2. I didn't catch that at first, but I was certain that they were going to pay a dividend in Q2 the last time they mentioned a dividend. It's a bit disappointing. I'm hoping its more of an interpretation issue on my part, but it has me concerned now given the poor earnings in Q1 and now a delay in starting a dividend? Thoughts on this?