Dane Bowler

Long/short equity, value, hedge fund analyst, reits
Dane Bowler
Long/short equity, value, hedge fund analyst, REITs
Contributor since: 2012
Well, there clearly would be a financial gain, but i'm not sure how it would be recognized in the accounting. It might mark to market continually, or it might wait until sale. Perhaps someone else with more accounting expertise could help us here.
It certainly would have an impact, but it will vary substantially from person to person depending on their cost basis and what sort of account they are holding O in.
The high current yield is a consequent of MPW getting so cheap. It is not a sign of risk and is VERY well covered by FFO.
Thanks nor
gsterling beat me to it, I agree with those comments about diversification.
Regarding the hospital industry, it seems the current environment is separating the wheat from the chaff. Changes to medicare/medicaid reimbursement seem to be punishing weak or inefficient operators. Thus far, it seems MPW's operators are performing well.
They recently did an investor day presentation in which all of their operators gave a presentation and they seem rather impressive.
The GOV ownership of SIR is very likely to be foul play. Its one of the nasty things we have to be comfortable with in owning an RMR company.
I don't view it as a risk fundamentally as SIR actually has a fairly quality portfolio, it is more of a governance risk.
Many of REITs have high yields right now. GOOD and MPW are particularly opportunistic. As I don't know your individual situation, I can't recommend them, but it might be worth some diligence.
I am long NRF as it is very cheap relative to its fundamentals. I do wish management would be more communicative with shareholders though.
I wish I could take credit here, but REITs in general are down just a much so i may have gotten lucky on the macrotrend
Anonymous Vol trader,
Great point, one would have to account for that.
Please note that most of GOOD's dividends are tax deferred by merely reducing the cost basis of the investment.
What makes GOOD risky? it is among the most stable REITS.......
Rather than assuming risk based on a high yield, please do the fundamental research. There is very little risk there.
So some other analysts being wrong about tech stocks makes my thesis wrong?
I don't follow the logic here.
There are arguments to be made for or against my article, but this is simply not valid
Thanks for commenting.
I fully recognize that O is a better company and am not suggesting that this is a like-kind exchange.
The question is how much one is willing to pay for a better company. is more than 100% more for each dollar of FFO really worth it?
Its simple math explained in the article. I didn't come up with the number its just math.
Hey Brad,
I figured you might have a rebuttal piece coming on my O thesis. Its great that readers get to see both perspectives and decide for themselves.
Anyway, I just want to push back a bit on 2 points
1) cost of capital
2) GOOD's risk
Using equity multiple as a measure of cost of capital is accurate in some ways, but it is also a slippery slope as it essentially means the more expensive the better. If O were trading at $10,000 per share with its current FFO, it would have a cost of capital approaching 0 making it an even better buy right? Our intuition tells us this is not the case.
Regarding GOOD, I think it is rather misleading to call it a value trap. It has been extremely stable through the entirety of its history. It has grown FFO/share steadily and fully covers its dividend. It is a very safe stock that is simply cheap because people don't like external managers despite the fact that Gladstone has been very aligned with share holders and runs the company more cheaply than it could be run internally.
Thanks for furthering the discussion,
Oh just caught it. I messed up the disclosure. Sorry about that and for the record I am NOT long O nor was I at the time of writing.
Mr. Sceptic,
I don't have any O and I haven't had any for a long time.
If I messed up a disclosure, please point me to it so i can correct it.
Hey Reuben,
It looks like there has been some convergent evolution here. My article with a similar thesis came out at the same time as yours.
What would you buy with your proceeds from O? It seems with the selloff there are plenty of great alternatives.
It is including a DRIP on paid dividends.
BA Man,
The covered call is an interesting yield supplement. Thanks for sharing.
Sure, I would argue that Easterly Government Properties (DEA) is actually safer than O as its properties are 96% leased to the US government on long term leases. It too has a superior yield and faster FFO growth rate.
nice timing on those trades. Regarding the OHI and LXP, the price may be volatile, but fundamentals are quite steady. Perhaps we can just wait out the pessimistic pricing.
Using your original cost basis, switching to the basket would give you a 18% Yield on Cost since you would be selling O for its current market price, not what you paid for it.
Just food for thought and grats on your excellent entry point.
A few dispositions yes, but i'm not sure that any of them are new news. It may have just been a statement of those that were made in the quarter.
The entire article is about how WHLR will continually lose money until it goes to 0. The headline accurately represents the content.
CBL just reported 4Q earnings. Report looked pretty good with a bottom line beat and strong guidance, but occupancy was a touch low. I anticipate a favorable reaction in trading tomorrow, but only mild.
Thanks for the comment. I haven't dug into the preferred myself, but based on your comment it sounds like a valid alternative.
Long player,
Thanks for letting me clarify here. The line of credit should still be fine. I am referring to an inability to issue more equity.
I didn't cover the tenant quality angle much so your article will fill the gap nicely. I'm looking forward to it.
Long Tail,
Due to difficulty to borrow shares, I was quoted a mid teens cost of borrowing.
I imagine this varies significantly between custodians so there is probably somewhere it can be done for free. Interactive Brokers has a good chunk of shares that are borrowable, so those might be free.
Good to hear from you,
I agree with you that it is plausible to achieve profitability and right the ship. It just comes down to a judgement call on information we don't have yet.
If WHLR is run exceedingly well with proper cost controls and good acquisitions it may succeed, but given its history and what I would consider to be a lack skill from management, I see it as unlikely.
Thank you for offering your dissenting opinion in a way that furthers the conversation and best of luck to you in your investment.
The Long Tail,
Good question, I tried to short but my custodian did not have any shares available to borrow at a reasonable cost.
So to clarify, I am not short yet, but intend to short if I can do so cheaply.