Silver Bay Realty Trust: A Disaster Waiting To Happen [View article]
Thomas: “I don’t think this is really a cash play as much as an asset recovery play in US housing though.” Josh: “ I don't see why anyone would buy a REIT that isn't looking for yield.”
I agree with both statements: The REIT structure has an implied Income Oriented Investor appeal. Good quality apartment REITS are paying around a 4% dividend rate. The inherent cost structure associated with SFRs is such that SBY will NOT be able to exceed that for MANY years. If there is an advantage to renting SFRs compared to apartments, it will be in asset appreciation, not free cash flow. This means that the existing ownership mix will be disappointed.
Josh, I believe that if you adjust for the higher property tax rates in Texas, your comparisons with tighten. The most significant problem in the SBY cost structure is that the management compensation is tied to the stock based market cap, which is not currently in line with either gross rents or FFO. If I were interested, I’d invest in the management company….$$$ IMHO...wes
American Capital (ACAS -4.9%) bulls may be getting a buying opportunity post-earnings. A $47M sequential decline in revenue is largely the result of non-recurring factors, according to management (CC transcript). Of a $49M increase in non-accruals, CFO John Erickson reminds the company is often in a "very" junior position and weaker performance can force a loan into non-accrual status, but that doesn't mean the return disappears. (presentation slides). [View news story]
For me, today was a buying opportunity to add to very profitable existing position. Execution is based on long term profitability, not just instant gratification. I'm too old for 5 yard sprints....LBM
Valero Energy (VLO) +1.6% AH after its board approves the spinoff of its retail business, CST Brands. VLO said last summer it would explore options for the gasoline and convenience stores it owns in the U.S. and Canada, including a spinoff that gives its shareholders ownership of the retail unit. [View news story]
A side question....what happens to the options some of us hold?
I know: "tis better to be assumed a fool, that to open ones mouth and remove a doubt."
Rent A House But Don't Own This Rental Stock Just Yet [View article]
Please correct me if I'm wrong, but isn't the management fee being charged 2% of the company market cap? If so, that works out to almost 20% of stabilized rents. That is not a typical expense factor. I also checked the Property taxes in the markets and they will average over 1% of market value, or 10% of stabilized rents. That is 30% right off the top. Good thing there is no leverage.
REITs: Why The Dividends Are A Mirage [View article]
If I want a REIT to be a growth stock I just enroll in a DRIP plan. Works just fine.
I invest in a lot of high dividend stocks not for the dividends, but because dividend investors invest rather than "trade". Less volatility in the portfolio. I'm still working, so dividends or appreciation is the same, I don't care.
Two key points: First, the great thing about alzheimers is you're always meeting new family members, and second, "Too soon old, too late smart". I had to number my kids.
REITs: Why The Dividends Are A Mirage [View article]
Just as an aside, it is possible for a REIT to be profitable but cash flow negative if debt impersonations were fast or there were balloon and/or credit line payments due. In this case borrowing and/or stock issuance would be needed. I personally would not invest in a company managed this way. Note, a bankruptcy of a major shopping center REIT a couple years ago was because it was cash flow negative [balloon payments due in a credit ice age], BUT PROFITABLE.
REITs: Why The Dividends Are A Mirage [View article]
What has changed is that the 10% cash is in my pocket. The dividends are paid out because the REIT status requires it.
Moving cash from a company to an individuals pocket is not what typically would be a considered a "MIRAGE". Failure to pay out cash flow would cause most REIT investor to go elsewhere. REITs are not set up to be "growth stocks", but receive specific taxation benefits conditioned on paying out cashflow. New acquisitions are paid for from asset sales or new stock offerings, THAT IS THE INTENT.
Your definition is "unique" at minimum, and does not qualify as "generally accepted". On the other hand, I'm getting old and maybe owning investment RE since 1968, being a REIT investor for 2 decades, and supervising 10,000+ RE appraisals per year for 18 years has caused me to become delusional.
WTI-Brent Spread To Test $30 Level In 2013 [View article]
What the GC really needs is the heavier Canadian Crude. GC refiners weren't designed to take all the lighter crude we are now producing. In addition, they can't export domestically produced processed crude. They can only export imported finish product [Canadian or X / one of the refiners does have a specific allocation exception, maybe PSX] . This is not simple.
"Knowledge is the discovery of ignorance." The more I know the dumber I feel........wes
Refiner profitability is tied to its crude source and cost. East and West Coast do not have the same crude costs as the mid continent and Gulf Coast, hence different results. That's why alternative transport [RR Cars] east and west make financial $cents.
Note: Hess is closing their New Jersey refinery due to margin and upgrade $ issues. Not all refineries are created equal.
U.S. Refiners Cash In On Cheap Canadian Crude [View article]
In conjunction with a couple refinery valuations I was doing in 2011, I looks at sales on the East Coast and Gulf. Things were really tough with margins under pressure. The refinery closure in New Jersey by Hess highlights this. Also referenced in the considerations were Environmental Upgrade Requirements. Over the past 18 years [my involvement], the cost of such mandatory upgrades have been at the center of dozens of refinery closures. Too expensive, too little return.
IMO, PSX's RR car purchase and decision to move crude to one of its East Coast Refineries touches on this topic.
2 Brand New REITs That Have Strong Dividend Potential [View article]
Four decades ago I did this with SFR's. With no mortgage payment this will kinda work......I'm estimating a potential dividend around 4%, on par with good Apartment Reits. But this doesn't leave anything for growth.....oh, how about raising more capital through additional offerings.
I know people who are going to make money on SBY as a trade. Not going to bet they own it for more than 4 months.......unless it's with a "I should have......"
There is some potential in getting these units marketable and them offering a "lease to own" twist that might be workable. I think there is more potential in the appreciation the rental cash flow here.
2 Brand New REITs That Have Strong Dividend Potential [View article]
You're applying the 15 PE to revenue BEFORE expenses. The management fee is 2% of the MARKET CAP [-20%] and property taxes [-10%]. There also might be some repair and maintanance, insurance, and who knows what.
I once was told that "we only loss a little on each transaction, but make it up in volume." Hmmmmmm. I love this discussion!
U.S. Refiners Cash In On Cheap Canadian Crude [View article]
When I inquired last November about the turnaround cost, I recieved that following response on NTI:
1. Our major turnaround will occur in April of 2013, where we will shut the whole plant down for approx. 25 days. We will also have a turnaround in October of 2013 where we will shut down the catalytic cracking unit and will run at lower rates. 2. We have costs (both capex and expense) related to our waste water treatment plant. We guided towards approximately $40 mm of TOTAL maintenance capex spend in 2013.
Silver Bay Realty Trust: A Disaster Waiting To Happen [View article]
Josh: “ I don't see why anyone would buy a REIT that isn't looking for yield.”
I agree with both statements: The REIT structure has an implied Income Oriented Investor appeal. Good quality apartment REITS are paying around a 4% dividend rate. The inherent cost structure associated with SFRs is such that SBY will NOT be able to exceed that for MANY years. If there is an advantage to renting SFRs compared to apartments, it will be in asset appreciation, not free cash flow. This means that the existing ownership mix will be disappointed.
Josh, I believe that if you adjust for the higher property tax rates in Texas, your comparisons with tighten. The most significant problem in the SBY cost structure is that the management compensation is tied to the stock based market cap, which is not currently in line with either gross rents or FFO. If I were interested, I’d invest in the management company….$$$ IMHO...wes
American Capital (ACAS -4.9%) bulls may be getting a buying opportunity post-earnings. A $47M sequential decline in revenue is largely the result of non-recurring factors, according to management (CC transcript). Of a $49M increase in non-accruals, CFO John Erickson reminds the company is often in a "very" junior position and weaker performance can force a loan into non-accrual status, but that doesn't mean the return disappears. (presentation slides). [View news story]
Valero Energy (VLO) +1.6% AH after its board approves the spinoff of its retail business, CST Brands. VLO said last summer it would explore options for the gasoline and convenience stores it owns in the U.S. and Canada, including a spinoff that gives its shareholders ownership of the retail unit. [View news story]
I know: "tis better to be assumed a fool, that to open ones mouth and remove a doubt."
Rent A House But Don't Own This Rental Stock Just Yet [View article]
REITs: Why The Dividends Are A Mirage [View article]
I invest in a lot of high dividend stocks not for the dividends, but because dividend investors invest rather than "trade". Less volatility in the portfolio. I'm still working, so dividends or appreciation is the same, I don't care.
Two key points: First, the great thing about alzheimers is you're always meeting new family members, and second, "Too soon old, too late smart". I had to number my kids.
REITs: Why The Dividends Are A Mirage [View article]
REITs: Why The Dividends Are A Mirage [View article]
Moving cash from a company to an individuals pocket is not what typically would be a considered a "MIRAGE". Failure to pay out cash flow would cause most REIT investor to go elsewhere. REITs are not set up to be "growth stocks", but receive specific taxation benefits conditioned on paying out cashflow. New acquisitions are paid for from asset sales or new stock offerings, THAT IS THE INTENT.
Your definition is "unique" at minimum, and does not qualify as "generally accepted". On the other hand, I'm getting old and maybe owning investment RE since 1968, being a REIT investor for 2 decades, and supervising 10,000+ RE appraisals per year for 18 years has caused me to become delusional.
WTI-Brent Spread To Test $30 Level In 2013 [View article]
WTI-Brent Spread To Test $30 Level In 2013 [View article]
"Knowledge is the discovery of ignorance." The more I know the dumber I feel........wes
Valero's (VLO +11.4%) "best quarter in years" is broadly lifting shares of other refiners: TSO +4.5%, PSX +4.6%, HFC +5.7%, WNR +5.1%, MPC +4.9%. VLO's switch away from imported light, sweet crude toward domestic sources was anticipated but came earlier than expected, and represents a milestone in a U.S. energy industry hoping for self-sufficiency. [View news story]
Note: Hess is closing their New Jersey refinery due to margin and upgrade $ issues. Not all refineries are created equal.
Long NTI, ALDW, CRVV, PSX & CLMT.
U.S. Refiners Cash In On Cheap Canadian Crude [View article]
IMO, PSX's RR car purchase and decision to move crude to one of its East Coast Refineries touches on this topic.
2 Brand New REITs That Have Strong Dividend Potential [View article]
I know people who are going to make money on SBY as a trade. Not going to bet they own it for more than 4 months.......unless it's with a "I should have......"
There is some potential in getting these units marketable and them offering a "lease to own" twist that might be workable. I think there is more potential in the appreciation the rental cash flow here.
2 Brand New REITs That Have Strong Dividend Potential [View article]
I once was told that "we only loss a little on each transaction, but make it up in volume." Hmmmmmm. I love this discussion!
Canadian Heavy Pricing Pressures? No Problem For Suncor [View article]
U.S. Refiners Cash In On Cheap Canadian Crude [View article]
1. Our major turnaround will occur in April of 2013, where we will shut the whole plant down for approx. 25 days. We will also have a turnaround in October of 2013 where we will shut down the catalytic cracking unit and will run at lower rates.
2. We have costs (both capex and expense) related to our waste water treatment plant. We guided towards approximately $40 mm of TOTAL maintenance capex spend in 2013.
Wes