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Steven Reiman

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  • GPT Forum [View instapost]
    vjrao,

    Thank you for the very detailed response.

    I think I'm being thick on this one but I'm still a little confused. Isn't slide 16 in this supplemental pack the statement of operations for the entire JV?

    http://bit.ly/1bhvpQY

    If the interest expense was 13% wouldn't this be reflected in this financial statement? If you look all the way to the right, this is where I got the GPT $1.17M interest expense.

    Am I not thinking about this correctly?

    Steve
    Nov 9 04:34 PM | Likes Like |Link to Comment
  • GPT Forum [View instapost]
    That's not tying to their financial statements. 13% on $100M would be $13M in interest a year or $4.25M a quarter. If you look at slide 16 of the supplemental pack you'll see they paid $1.17M in Q3. How does this reconcile to Gordon's statement?
    Nov 9 11:57 AM | 1 Like Like |Link to Comment
  • GPT Forum [View instapost]
    Well the the 10 year UST is on the screen right now at 2.74 so its hard to see how they could possibly get their cost much lower than 4% - 4.5%
    Nov 8 09:29 AM | Likes Like |Link to Comment
  • GPT Forum [View instapost]
    Vjrao,

    I think they are paying 1M a quarter on that floating note - where are you getting 13% from? Also, the current note is interest only so I would expect the total cash outflow from the note will increase when it is refinanced due to 1). the increased interest rate as they switch from floating to fixed and 2). the fact that they will need to start to amortize the principal.

    Steve
    Nov 8 09:23 AM | Likes Like |Link to Comment
  • GPT Forum [View instapost]
    Yes and no. I believe the pipeline is around $100M so I just tried to show what $100M of additional acquisitions at a 7.5% gets you given that they have used up most of the "free" money and are now going to have to start utilizing their debt capacity to buy property. This is perfectly fine (I think they actually should lever more than 1:1) but they are going to need to pay interest on the debt so the incremental AFFO from buying additonal property starts to go down (although it is somewhat mitigated by levering the fixed MG&A cost).
    Nov 7 09:43 PM | Likes Like |Link to Comment
  • GPT Forum [View instapost]
    I agree that Gordan is doing a great job. Europe is an interesting idea.

    However, just to give the other viewpoint:

    The company made $2.2M in AFFO. $0.6M of that is from the defeasance pool and should be non-recurring so the real number is more like $1.6M. Divided by the 70.1M of shares outstanding gets me to $0.02 share or $0.08 annualized.

    To get to $0.16/share (which would imply a $3.20 share price at a 5% dividend) they are going to have to bring in another $1.6M per quarter. This might actually be harder than it sounds if you think about it this way:

    $1.6M is $6.4M annualized. If they invest another $100M at a 7.5% cap they will get an additional $7.5M NOI. However, their remaining capacity is made up of borrowings so they will need to take out mortgages at around 4.5% to buy additional properties so really the incremental AFFO from investing another $100M would be $3M. ($7.5M - $4.5M). So if they invest another $100M they will have an AFFO of 0.13/share or an implied share price of $2.60 at a 5% yield.

    Basically, they are going to have to do another equity raise to get additional capacity to get their dividend into respectable territory.

    Would be happy to get anyone's thoughts. My math could be wrong, just did some quick back of the napkin calculations.


    Steve
    Nov 7 09:37 PM | Likes Like |Link to Comment
  • Willis Lease Finance: An Engine Leasing Powerhouse [View article]
    Another great quarter in the books for the WLFC team http://yhoo.it/1cHiM8k
    Nov 7 08:27 PM | 1 Like Like |Link to Comment
  • Pulse Seismic: A Canadian Micro-Cap With Moody's-Like Economics [View article]
    I agree that Pulse is undervalued (and have wrote them up twice before) but I think your sales projections are a bit too optimistic especially given the tough time WCS and AECO have been experiencing as of late. The spread between WCS and WTI is currently at $40 which is creating a massive drag on capex spend in the WCSB. Approval of the Keystone pipeline should hopefully provide some lift but who knows when that legislative gridlock will lift.

    Steve
    Nov 7 05:05 PM | Likes Like |Link to Comment
  • Gramercy AFFO turns positive; expects to start common dividend in Q1 [View news story]
    I wasn't thinking about WLFC being an acquisition target until you brought it up. Now that I've thought about it, it makes a lot of sense. Mr Willis is in his 60's and he's known as a bit of a micromanager so hard to see him passing on the reigns to someone else. I bet he would much rather just cash out when he retires.
    Nov 7 09:06 AM | Likes Like |Link to Comment
  • Gramercy AFFO turns positive; expects to start common dividend in Q1 [View news story]
    CNRD looks like they will pay another special dividend in December. GLUX if you feel like gambling. Winston's SAEX also looks cheap but that will probably be rectified after this month's earnings release.

    Could always do WLFC!
    Nov 7 09:00 AM | 1 Like Like |Link to Comment
  • Willis Lease Finance: An Engine Leasing Powerhouse [View article]
    But how do you measure ROE when earnings are so distorted by depreciation and asset write downs? The company has growing book value and generates a ton of free cash which are the two metrics I would measure it by. You can try other ways but it is tough to get an accurate read if the metric has earnings as a component of it. It's somewhat akin to the problem analysts had when they were trying to analyze John Malone's old company TCI. They never had positive earnings even as the company was absolutely swimming in cash.
    Nov 6 04:52 PM | Likes Like |Link to Comment
  • Willis Lease Finance: An Engine Leasing Powerhouse [View article]
    That's one way to look at it. As I said in the article, I prefer not to look at earnings as they tend to be skewed by heavy depreciation charges. Engines are a relatively liquid asset which is why I choose to use book value as the metric with which to measure management. The company has managed to increase book value year over year going back to 2005 which I believe is impressive considering what happened to the economy during that period.
    Nov 5 06:19 PM | Likes Like |Link to Comment
  • Willis Lease Finance: An Engine Leasing Powerhouse [View article]
    I don't have any particular insight into the contract risks/opportunities. They have a wide portfolio of engines that are constantly coming on and off lease - if the economy improves utilization should go up, if a recession hits it should go down.

    The fixed rate debt has a contractual maturity of ~25 years but an effective maturity of 10 years. There is a difference due to the fact that the amortization of the debt is dependent on the cashflows derived from the engine collateral.

    Steve
    Nov 5 06:05 PM | Likes Like |Link to Comment
  • Willis Lease Finance: An Engine Leasing Powerhouse [View article]
    I don't believe book value is off as they are forced to write down their assets every quarter to reflect their fair value. Therefore, they would take into account any accelerated depreciation. This obviously involves the trust that management is playing straight dice but I like the team in place.

    I'm not too worried about engine utilization - part of this stems from growing the portfolio. It also gives them leverage if the global economy picks up.

    Steve
    Nov 5 06:03 PM | Likes Like |Link to Comment
  • Just A Few ?s For… Mike Winston [View instapost]
    I employ the annual letter technique as well, it is amazing what you can pick up.

    It can also be entertaining: I find that the letters are generally sunny and full of optimism in the 2004-2007 time frame and then quickly turn grim as they enter 2009-2009. I have found that the annual letter formatting even gets more dour as if the company is cutting expenses to the bone and cannot afford to put out glossy finishes and large amounts of color on their annual reports anymore.
    Nov 4 04:49 PM | Likes Like |Link to Comment
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