Seeking Alpha


Send Message
View as an RSS Feed
View charliezap's Comments BY TICKER:
Latest  |  Highest rated
  • A Fundamental Analysis Of American Realty Capital's Likely Dividend Cut [View article]
    Actually they bought Red Lobster stores and leased them back to Red Lobster.
    Dec 19, 2014. 01:56 AM | Likes Like |Link to Comment
  • Update: OK, Now We're Cautious On ARCP [View article]
    ""how do you know those rents are covering expenses without financial statements?""

    ARCP is a triple net REIT, which means the tenants pay property taxes, insurance, and common area maintenance. This just leaves corporate administrative expense and legal expenses to be paid by ARCP.
    Dec 18, 2014. 07:17 PM | 2 Likes Like |Link to Comment
  • An Intelligent Way To Think About Healthcare Trust Of America's Reverse Stock Split [View article]
    IMO, a reverse split like this is pure optics. Can you name any institutions that won't buy shares that sell "around $10"? (HTA is currently close to $26, or $13 on a pre-RS basis.)

    Besides, why own HTA, which is relatively high priced? At 17.6X, HTA sells at a premium to Normal FFO, according to your chart. The yield of 4.6% is modest. Why not SNH, at 12.7X and 6.9%? Or, if you don't like externally managed, how about OHI at 13.5X and 5.5%?

    I'll concede one point, which is that HTA may sell at a lower premium to NAV than most other health care REITs (except SNH). A report from Citi puts HTA at a 16% premium, compared with a healthcare average of 31%. (OHI is at 50%!)
    Dec 18, 2014. 11:46 AM | 2 Likes Like |Link to Comment
  • Update: OK, Now We're Cautious On ARCP [View article]
    STWD is a different breed of cat, a mortgage REIT. STWD's assets are primarily relatively risky commercial mortgage loans, including land development loans. The main source of revenue is interest on those loans.

    ARCP, on the other hand, is an equity REIT. ARCP's assets are primarily land and buildings, including retail and office. ARCP's revenues are primarily rents on ten year leases to investment grade tenants, such as FedEx.

    Although STWD is modestly levered compared to most mortgage REITs, its debt/equity ratio is hgher than that of ARCP, 99% to 90%, according to Yahoo. Mortgage REITs are often valued relative to book value. In the case of STWD, book is $17.06 per share (latest quarter). At $23.37, STWD currently sells at a premium of 37% compared to book. Based on an assessment of the current value of its loans, Starwood reports that "fair value" is $17.65 per share. Starwood sells at a premium primarily on account of its high dividend yield.

    Equity REITs are often valued relative to NAV, in which the market value of the properties is substituted for the depreciated book value. ARCP sells ata discount to NAV, which is somewhere in the range of $10-13 per share (its hard to be more precise, because of the recent series of transactions, failed and otherwise -- I would put it at at least $12).

    IMO, if ARCP completes its restatement satisfactorily, and gets new competent managers in place, the stock price will trend back up to the area of $12. Its a better bet, and has a higher yield (even if the dividend is trimmed slightly) than STWD.
    Dec 18, 2014. 10:50 AM | 4 Likes Like |Link to Comment
  • Which Big Oil Dividends Are Safe? [View article]
    Quote: """Exxon Mobil now has about $347 billion in assets on its balance sheet following this recent period of sustained high prices. Could some of these assets be sold or leased to bolster cash and ongoing operating expenses?"""

    You won't find XOM selling many assets at what would have to be fire sale prices. To maintain or increase the dividend, XOM has a at least 3 other options, and they could apply all 3:

    1. Cut capital expenditures, which is a wise thing to when low oil prices reduce the ROR,

    2. Cut the buyback level, or,

    3. Borrow funds, based on their AAA bond rating.

    Quote: """ . . companies could make $84 per barrel or more when market prices were above $100 per barrel. Today, with oil at $58 per barrel, companies are only going to make $42 for each barrel sold, half of what it was. This implies that at current levels, 50% of all revenues derived from crude and conventional sources are at risk."""

    I'm not sure that I follow the logic, or the terminology here. Your example seems to discuss what I call Operating Income, rather than Gross Revenue. It also seems to gloss over the difference between fixed and variable expenses. There is no mention of taxes and royalties, which could be on a percentage basis or on a per barrel basis. Nor is there any mention of the "take" of producing country "partners". And, what about chemical ravenues? Expanding refining margins?
    Dec 17, 2014. 03:04 PM | 4 Likes Like |Link to Comment
  • Update: OK, Now We're Cautious On ARCP [View article]
    The candlestick charts show a bullish engulfing today, indicating an upside reversal. All it took was for Orange Peel to throw in the towel, perhaps a perfect sign of the bottom. On the hourly chart, the MACD has turned positive. Can the daily MACD be far behind?
    Dec 17, 2014. 01:05 PM | 4 Likes Like |Link to Comment
  • Update: OK, Now We're Cautious On ARCP [View article]
    NOI (net operating income, which provides the wherewithal to pay the dividends), not ROI, is the issue. The majority of tenants have investment grade credit ratings, so the rents will keep coming in. ROI, on the other hand, is based on GAAP accounting, which distorts results for property REITs. (GAAP accounting deducts depreciation from income statements and balance sheets -- but most commercial real estate appreciates over time.)
    Dec 17, 2014. 12:03 PM | 1 Like Like |Link to Comment
  • Is The Weak Housing Market A Warning Sign For The U.S. Economy? [View article]

    1. We have gasoline below $2 in some places.

    2. Housing is bigger than energy, and has the potential to grow more than energy in the next 2-3 years. In 2013, the category "gasoline and other energy goods" contributed just 2.4% to total US GDP. Residential construction, on the other hand, contributed 3.1%.
    Dec 17, 2014. 11:46 AM | Likes Like |Link to Comment
  • Is The Weak Housing Market A Warning Sign For The U.S. Economy? [View article]
    @ant21b, there is a big, big difference between now and the years you cite. In 1984, total housing starts were 1.7 million; in 1994, we had 1.4 million, and in 2004, 2.0 million. Currently, the rate is around 1.0 million. This is way below new household formations, which are based on population growth and other demographics. Housing starts are not in a downturn, just on a temporary plateau -- there is a long way to go on the upside. The job growth thing will feed on itself, as a lot of the new jobs will be in construction, not just residential, but also commercial.
    Dec 17, 2014. 11:33 AM | Likes Like |Link to Comment
  • Is The Weak Housing Market A Warning Sign For The U.S. Economy? [View article]
    @freedom, lower gas prices mean that people will buy more of everything.
    Dec 17, 2014. 10:28 AM | Likes Like |Link to Comment
  • Is The Weak Housing Market A Warning Sign For The U.S. Economy? [View article]
    @creese, Texas and North Dakota may be affected by a decline in oil spending, but there are 48 other states that will benefit more from the added disposable income.
    Dec 17, 2014. 10:27 AM | Likes Like |Link to Comment
  • Is The Weak Housing Market A Warning Sign For The U.S. Economy? [View article]
    1. You are missing the elephant in the room: LOWER OIL PRICES! This will add billions to disposable income, boosting retail sales, manufacturing, and jobs.

    2. The existing home sales statistic is not a very good indicator of current or future GDP growth. New home sales are a better indicator: when a home moves out of builder inventory, there is the incentive to start a new home, which adds to GDP.

    3. New home sales correlate strongly with: A) interest rates, and, B) job growth. We've had the low interest rates for some time. Now, based on the latest monthly report of job growth over 300,000 for the first time in a long time, we'll have the job growth. The outlook for home builders is strong!

    Disclosure: Long SPF, LEN, UCP.
    Dec 16, 2014. 03:54 PM | Likes Like |Link to Comment
  • Don't Buy Exxon Mobil [View article]
    """ They are getting heavier into renewables . ."""

    Are you serious? About 99.9% of XOM's revenues comes from oil and gas, and chemicals, mostly derived from oil and gas feedstock.
    Dec 11, 2014. 12:44 PM | 10 Likes Like |Link to Comment
  • BP's Dividend Hors D'oeuvres [View article]
    Jerry, BP had the bad luck to hit a pot hole in the road, i.e., Macondo, and they broke an axle. By the time the axle was fixed, their competitors, XOM, CVX, RDS, COP, were far ahead in the race. Anyone can have an accident, and in the new race going forward, BP's prospects are just as good as those of XOM, CVX, RDS, and COP, in my simple opinion.
    Dec 9, 2014. 06:40 PM | Likes Like |Link to Comment
  • Why I Expect WTI To Go Back To $100 [View article]
    I'm signing off this one. Crude is below $63. Oil will eventually go above $100 again, but not in the near term time frame. Many of the comments contain no substance, or make no economic sense. Bye for now.
    Dec 8, 2014. 04:49 PM | 1 Like Like |Link to Comment