No real growth prospects and the energy overhang is my guess....the portfolio hasn't started feeling the pain in Houston yet which is a big market for them.
If interest rates were at a normal level. The fed tried to prop up the economy by enabling consumers with low rates...that worked for a little while but now they need to capture the spending power of those who have savings to have any kind of real effect on the consumption based economy. Savers have earned 0 and have cut back discretionary spending accordingly.
The back side of low interest rates are that rates of return are low as well.
There was an interesting article in the WSJ today regarding the difficulties facing the Houston office market. Given FSP's exposure there it will be difficult for the share price to improve materially until energy stabilizes. FSP has a high percentage of their portfolio in Houston, Denver, Dallas. Whether or not there is exposure the perception will keep institutional buyers of the stock on the side lines.
Well, that was the reason I became short several months ago....didn't see the collapse in NG/Oil but did think that the earthquakes would result in some restrictions on future production development.
I got lucky.....
After the cc will not be adding to the position at any level....with the energy expirations coming up in the near term it will be a challenging period for the next 1-2 years and the speculative Minneapolis development will test the capital capabilities.
Management really dismissed the question about any share repurchase which seemed odd ......seeking to buy properties with a 5% return when FSP pays an 8% distribution?
Are they booking profits on sales that haven't been completed? If so that's exactly like Enron...proforma profits....
I agree completely....easing for a year or two to shore up the system and try to keep consumption from collapsing would have been ok....but holding rates at 0 for 5 more years while the markets leveraged up and tripled was totally misguided.
pushed consumption with 0 interest rate policy. What they didn't consider is the cut in consumption from fixed income consumers which is proving to be much larger in the long run.
Nearly all pensions are underfunded....returns aren't there and those fiduciaries can't chase equities.
Looking like we're in a world of hurt and there is no room to lower rates....and if the fed thinks that these conservative groups will be "forced" to the equity market once negative rates are introduced they will be wrong again.
Well then you should really be loading up today at sub $9. You might be right but perception of heavy in energy markets IMO will keep others from trying to buy this portfolio until there is a clearer picture.
If you have to justify buying a stock by the fact that a buyout will make a good return it's probably not a good investment. Just saying and btw I'm long FSP and have been a holder for many years....total return is about break even as the distributions have been offset by the share price decline.
I'd buy more to average down but I'm not confident that they will be able to maintain the dividend and I'm not really a fan of the new "buy depressed cbd properties". That is a mature theme with a lot of risk.