The market is hating almost all REITS now. The DJI is up strong and again REITS are weak. High yields keep getting higher. Increase in interest rates has been on the table for months, so how can this be causing it? And even with the increase which is well know will happen, it ain't gonna be very much anyway when it takes effect. And even REITS like RSO which I also own has much of its loans linked to Libor so they won't get hurt. It all seems nuts and one would think we are seeing some historic buying opportunities here with low bond yields, a rather lofty stock market in other areas, yet high dividend paying stocks like REITS linked to a recovering real estate market and being punished tremendously. NUTS.
Thanks very much DAR for these estimates. Assuming these numbers are close, on a per share basis using 347 million outstanding NRF shares, I assume this would translate into approx $6.92 per share total (2.4B/347M) and according to your estimates with approx .31 = $2.15 per share ordinary div and approx .69 = $4.77 ROC. For most of us long term holders with minimal cost basis left, this will be a long term cap gain so we will have cap gain tax to pay on most of this.
I agree. This is nuts. I called Purvi at Investor Relations and urged them not only to buy back stock as promised, but if they have bought back some substantial amount of stock as they suggested they should please announce this to the world now. It would really be great to see some decent insider purchases at these prices, too. Well, crazy me, I bought more today at 3.88 and 3.86. I don't see why RSO gets beaten up that much more than other REITS, but they sure did even though they were all down. Go figure. REXI (Resource America) was down just 1.08%. If RSO is going to be on the rocks, REXI, you would think would share some in the stones, too.
Excertps from 2/26/15 news release:
"The Company expects that the proposed spin-off will be treated for tax purposes as a distribution to NorthStar Realty common stockholders equal to the fair market value of the distributed NorthStar Realty Europe shares. The proposed spin-off is expected to be completed in the second half of 2015."
....Mr. Hamamoto continued, "We believe that NorthStar Realty Europe will represent one of the only premier, high-quality pan-European commercial real estate portfolios available in the market. We expect NorthStar Realty Europe to create significant shareholder value by capitalizing on substantial internal and external growth prospects at a critical inflection point in the European real estate cycle, which has lagged the U.S. recovery and currently exhibits a historically wide spread between cap rates and interest rates."
Concern: stockholders will get a significant tax liability which Hamamoto must believe will be outweighed by the high stock value or cap rate of the new European REIT, or else why do it? It is some concern and wonder if this might be weighing on NRF stock price now, given the economic situation in Europe with also Greece looking more like eventually having to quit the Euro. Anyway, we are going to be forced to pony up a chunk of change to pay the tax on the distribution, so to offset we need higher PPS on the two companies and/or some possible increase in the combined payout (divs) of the two companies to break even on this spin. IF this distribution is so great for NRF stockholders, wonder why Ham and other insiders unloaded a lot of NRF shares early this year (Jan-April)? Anyway, still long 14,500 NRF shares, don't like the certainty of a nice tax bill vs. the uncertainty of future higher valuations, even if that happens, you have to sell some of those "higher" valued shares just to break even for the tax.
Right now, Scottrade showing 95,000 shares bid at .81 and 100 shares asked at .8188! Go figure! Added another 5,000 the other day at .82, so total 159,600 shares with nice loss, but I'm holding this for the long term.
And just remember that old adage: in the "long term" we're all dead! There are days in feels like this with UGH, oh, I mean URG.
Thank you Radical Technologies (Money Map Press) recommendation which is updated below well after I bought it, now with a small 50% loss! Touching its YEARLY LOW at .60. And how do they ever get uplisted to the NASDQ with a PPS of .60 per share?
"Stellar Biotechnologies Inc. (TSX.V: KLH) made a run at a rebound but recently softened again. This despite the fact that it reported very impressive quarterly results with a 238% increase in sales of its unique "living metal" compound, KLH. We entered in three different tranches, and your return will depend on when you made the buys. Remember, we want to hold this stock for two years to take advantage of the firm's expected uplisting to the Nasdaq."
Well said, DAR. I'm inclined to hold the remaining shares I have. I ask myself the exact question you pose, so not inclined to sell NRF now.
I know. Hard to believe I sold off 500 shares a on May 29 at 18.27. Still hold 14,500 shares, about half of original investment. Problem some of us face now who have this at very low purchased cost in regular accounts + ROC has virtually wiped out our cost basis, so I have a $222K taxable gain on my remaining shares. I sold quite a few shares last year including all NSAM and paid a lot of cap gain tax in 2014, but would prefer to hold these remaining shares and take the divs as I'm in retirement. Don't want to risk a sizeable decline in the stock price either, so what to do, DAR? One would think the stock shouldn't go too much lower as the yield gets even larger, making it both more attractive for longs and more difficult for shorts as they have to pay out those dividends to the longs. As long as NRF can at least maintain this div, i guess we're somewhat near the bottom. What do you think?
Meant to add, our URG stock is currently down 1.8 cents with this news of large increase in recoverable reserves from URG Lost Creek. Makes no sense. What am I missing? DNN is unchanged and URZ up a penny now.
After taking into consideration the pounds produced, the current Measured Resource for MU1 increased by 1.329 million pounds to a revised total of 3.757 million pounds, a 55% increase to the last reported MU1 resource in the 2013 PEA.
And who, pray tell, is Mr. Chang? URG can most certainly needs some URGING to get up. I'm long 154,600 shares with average of $1.04! Suspect most holders are underground with this stock except insiders.
From their last May 22 Investor Conference, their Fiscal Year 2015 Guidance chart (you can see this on their website under investor relations) shows bottom line:
"Midpoint Distributable Cash Flow ($MM) (3) $185"
The DCF is as you suggested above. Checking Yahoo's Key Statistics, they appear to have outstanding 84 million total shares. So dividing 185 by 84 = $2.20 a share, so I don't see where the shortfall in DCF is per their own estimates.
Think that the decline in book value was .02 less than the dividend, which reduces book value by .20. Estimated book value declined by .18 from last month. That should be some positive news.
There is only one reason I can see, particularly with crude oil advancing over $1 to $61 plus, and that would be fear that the dividend won't be maintained at .55/Q going foward, i,e., it's only a matter of time before it's cut. If it wasn't for this fear, I can't see how it should trade at a 14.6% yield. I own 5,000 shares at an average cost of 15.06 and was tempted to add to my position today, but now I'm thinking if MEMP declines when the DOW is up over 236 points, what happens on a DOW down day? I think in the long term, this will be a winner with both a high yield vs. other div stocks (even if they cut it) plus a eventually a nice capital gain, too. I own a lot of REITS and I think they have been unjustifiably beaten up (I should say "down") too in this market, and I think there are some good buys in this area.
Bonds are "falling of a cliff" because there is like almost NO yield. How does than compare to AGNC with like a 12.5% yield now! This market is NUTS! Should be just the opposite. Should be a demand for generous yields that can even grow overtime, particularly in an uncertain market. And ain't no way interest rates are going to rise any time soon even close to historical normal levels. And AGNC does not have credit issues with their portfolio either and even sells now at a generous discount to book value. As this sets new lows, got to be a buying opportunity. They ain't go'in bust. It's crazy.
Thanks for sharing this, myson. I spoke to Purvi several weeks ago (perhaps Purvi is who you spoke to). I'll pass along one comment she made to me. After the last earnings and conference call, a well known analyst, Steve Delaney (JMP Securities) who usually listens to the calls and asks a question, did not at the last conference call. But I was told he phoned in after the CC with a question, and made some comment something to the effect that he thought the declining price of the stock and the market perception of RSO was not really reflective of their situation nor justified, or words to that effect. I take that as a positive. I'm long a lot of shares and have added some more at these lower prices. I hope RSO has acquired shares down here yielding 15.6%, which would seem to equal investment returns they make with that cash, so you'd think this would be a great opportunity, but I don't know. GLTA.
I understand that. But there is some relationship and they don't exist on different planets. If you are an agent collecting fees and the properties you rent/sell, then the viability and longevity of this income stream is also dependent on the returns and solvency of the underlying property. You think REXI is going to be just a great investment no matter what happens to the underlying core business of RSO?
Omega increased their stake to 11.9% of the shares of REXI (Resource America). I know Cooperman used to own RSO and sold out his position. But I still think this is some positive for RSO that he likes REXI this much. I don't think RSO collapses and REXI becomes a great success. I'm long a large position in RSO.