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  • Buying Realty Income At A 17x FFO Multiple And A 5% Dividend Yield Is A No-Brainer  [View article]
    I prefer to interpret it as meaning you have no brains if you buy it right now.

    Technical analysis ( FWIW ): The daily MACD remains on a negative (downtrend) signal, where it has been for the past 5 weeks. The RSI is at 29, i.e., it is below 50 and negative, but also in mildly oversold territory.
    May 4, 2015. 07:08 PM | 1 Like Like |Link to Comment
  • Buying Realty Income At A 17x FFO Multiple And A 5% Dividend Yield Is A No-Brainer  [View article]
    """Buying Realty Income in 1994 was a very wise choice"""

    Now that is really brilliant 20-20 hindsight!

    But today, O sells at an elevated price, compared with the historic average -- see the FASTGraphs in this article:
    http://seekingalpha.co...

    The yield is only 4.8%, compared with the average of the past 7 years, which is 5.7%. We are now in a period of super low interest rates, with rates likely to rise in the next 12 months, drawing many investors back to the fixed income market. With its long term (10-years plus) leases, O is locked into a predictable, but slow growing, revenue stream.

    Also, O now has very large company with a market cap of $11 billion. Same store rent growth is only 1.4% annually, so for accretive growth, O has to go out and make a lot of acquisitions, where the cap rates exceed O's cost of capital. Difficult as this is with O's current size (4,000+ properties), this will become even more difficult if interest rates move up, driving up the cost of capital.

    As for that 17.4% total return achieved since 1994, the future total return is likely to be less than half of that. Adding current yield (4.8%) to the analysts' forecast 5-year growth rate (3.4%, source: Yahoo) suggests total return of 8.2% for the future. And if the FFO multiple falls to a more normal 15X as rates move up, the total return for the short to intermediate term may be even less.
    May 4, 2015. 05:54 PM | 5 Likes Like |Link to Comment
  • Exxon Mobil - Relative Strength Thanks To The Integrated Business Model  [View article]
    Christine, yes, Monty Ward does bring back memories. This was definitely not one of Mobil's smartest moves. But it was the early 1970's, there was a middle east crisis, and gasoline prices were rising. Diversification became the buzz word and Mobil bought Ward's. Ted Kennedy went on record saying that Mobil would never find oil in the aisles of Ward's department stores. I worked in Mobil HQ and at MLDC (Mobil Land Development Corp), which was a more successful diversification effort, until taking early retirement sometime prior to the merger with (takeover by?) Exxon.

    I have enjoyed this little discussion. However, the reason for my original comment and questioning of the integrated model was that I think that most of the articles on XOM are simply superfluous. My guess is that there are probably at least 20 articles per month, or 1 for each working day. Most articles have little or nothing new to say about the largest publicly traded oil enterprise, nothing that is, that you could not get from the latest earnings report or press release. Some authors will come to an uninformed or otherwise debatable conclusion, but, in general, no one is going to call you an idiot if you buy or hold XOM stock.

    BTW: Yes, I do think the integrated model works for XOM. Plus, I hope XOM holds on to Torrance.
    May 4, 2015. 04:27 PM | 2 Likes Like |Link to Comment
  • Exxon Mobil - Relative Strength Thanks To The Integrated Business Model  [View article]
    Bayway was, and still is, one of the largest refineries on the east coast, if not the largest. Perhaps you are referring to the Bayonne, NJ refinery that was closed back in the 1970's. The relative unprofitability of east coast refineries is a relatively new phenomenon, based on the Brent-WTI crude price spread. Bayway was probably quite profitable back in 1992, when Exxon sold it.

    Bayway is now owned and operated by Phillips 66. Which raises the question: Why did Conoco-Phillips and Marathon spin off their refining operations, if the integrated model remains a good idea?

    Or is this, and other articles like it, just a case of 1-quarter 20-20 hindsight?
    May 3, 2015. 08:15 AM | Likes Like |Link to Comment
  • Omega Healthcare Is A Classic Textbook Model Of Repeatability  [View article]
    1 month relative performance:

    http://tinyurl.com/kjx...
    May 3, 2015. 07:50 AM | Likes Like |Link to Comment
  • Exxon Mobil - Relative Strength Thanks To The Integrated Business Model  [View article]
    """This quarter perfectly illustrates the value of the integrated business model."""

    So why did Exxon and/or Mobil sell the giant Bayway, NJ refinery, the Paulsboro, NJ refinery, and the Benecia, CA refinery? Why did they sell the Japanese refining subsidiary? Why is the Torrance, CA up for sale?
    May 2, 2015. 12:50 PM | 2 Likes Like |Link to Comment
  • Mr. Market Is Trying To Send Us A Message About Omega Healthcare  [View article]
    behere, thanks.

    Another point. I think it is significant that O and OHI have underperformed VNQ recently.

    In its recent quarterly on REITs, Citigroup says: ""We are underweight the net lease sector in our model portfolio, as we believe that interest rates will eventually rise and have an outsized impact on the sector’s valuation and performance.""

    Regarding the healthcare sector, they say: ""After putting up 34% gains in 2014, and outperforming the REIT index by 600 bps, Healthcare REITs were up 2.9% in 1Q, below the index at 4.7%. Performance has been driven in part by a low-interest rate environment, helping to boost accretion from acquisitions. An upward bias in rates could cap near-term appreciation as spreads narrow.""

    About 90% (2013 annual report) of OHI's revenue arises from triple net leases.

    My conclusion: it is mostly an interest rate thing.
    May 1, 2015. 02:12 PM | 2 Likes Like |Link to Comment
  • Mr. Valuation Says Digital Realty Is A Right REIT At A Right Time For Your Retirement Portfolio  [View article]
    Thanks, Chuck.
    May 1, 2015. 11:33 AM | Likes Like |Link to Comment
  • Mr. Market Is Trying To Send Us A Message About Omega Healthcare  [View article]
    BTW, here is the chart link:

    http://tinyurl.com/qfl...
    May 1, 2015. 11:21 AM | 1 Like Like |Link to Comment
  • Mr. Market Is Trying To Send Us A Message About Omega Healthcare  [View article]
    Frankly, I think the article is trying to make a case where none exists.

    First, I have to discount any article that uses Price to Book as a metric to evaluate equity REITs. I have elaborated on this point many times in previous comments. It is my contention that the use of this metric illustrates a lack of understanding of the eREIT business model. Let's just say that book value generally understates the market value of the property assets, and that the older the average age of the assets (since being placed on the books), the more the understatement.

    Second, many REITs, not just OHI, have been in a downtrend in recent weeks. Most REITs are selling at yields that are below historic averages, and the reason clearly is the current low interest rate environment. Many moneymarket and fixed income investors have gravitated to equities, including REITs, in search of yield. Now it looks like interest rates may have bottomed. For instance, the 10-year treasury yield has climbed from 1.85% to 2.10% in the past 5 weeks, making REIT investors nervous.

    A 1-month comparison chart (link below, if it works), shows the VNQ ETF and the large cap healthcare REIT VTR are each down by 6%. The monthly dividend favorite, O, is down by 9%, and OHI is down only a little more at 11%. I think this is more about interest rates than it is about OHI.
    May 1, 2015. 09:55 AM | 3 Likes Like |Link to Comment
  • Mr. Valuation Says Digital Realty Is A Right REIT At A Right Time For Your Retirement Portfolio  [View article]
    Steve, I think Chuck was probably using the term "distributable cash flow" somewhat loosely, but I think that you are contributing to the confusion when you refer to 90% of GAAP income. There is a difference between GAAP income and taxable income, primarily due to differences in depreciation -- by IRS rules, commercial buildings are depreciated straight line for 39 years. There are also timing differences in taking write-offs and items that are capitalized versus being expensed. It is 90% of taxable income that REITs are required to distribute. From the NAREIT website, here are the IRS requirements to quality as a REIT:
    ----------------------...
    How does a company qualify as a REIT?

    In order for a company to qualify as a REIT, it must comply with certain provisions within the Internal Revenue Code. As required by the Tax Code, a REIT must:

    Be an entity that is taxable as a corporation
    Be managed by a board of directors or trustees
    Have shares that are fully transferable
    Have a minimum of 100 shareholders
    Have no more than 50 percent of its shares held by five or fewer individuals during the last half of the taxable year
    Invest at least 75 percent of its total assets in real estate assets
    Derive at least 75 percent of its gross income from rents from real property or interest on mortgages financing real property
    Have no more than 25 percent of its assets consist of stock in taxable REIT subsidiaries
    Pay annually at least 90 percent of its taxable income in the form of shareholder dividends.
    ----------------------...
    Apr 30, 2015. 06:59 PM | Likes Like |Link to Comment
  • Evaluating The Results Of BP  [View article]
    WaterM, who knows on #1, who knows on #2, and if 3a or 3b happen, I hope you are 100% in gold. Do you know that Iran has 2 1/2 times the population of Iraq, and we know how that one ended (and how may $$$$ it added to our US federal deficit -- wars do cost something after all). Fortunately, wacko ideas usually do not go very far!
    Apr 30, 2015. 04:57 PM | 2 Likes Like |Link to Comment
  • REIT talks progressing at TravelCenters of America  [View news story]
    According to the TA 2014 10K annual report, TA owns 64 sites. HPT owns 179 sites and leases them back to TA. There are 11 sites that are otherwise owned. If the 64 sites are actually worth $400 million, that's $6.25 million per site. May be a stretch.

    Personally, I don't expect much to come of this. TA stock has already risen substantially. I think this press release is just a face saver to enable RDG to go away quietly.

    I sold TA too soon, but still hold HPT, which pays 5.9% and has some upside from here.
    Apr 30, 2015. 02:57 PM | Likes Like |Link to Comment
  • An Impressive Quarter From The Monthly Dividend Company  [View article]
    Why the drop? With their long term leases and predictable cash flows, triple net REITs have become bond substitutes in this low interest rate environment. I.e., they have become caught up in the bond bubble. The yield on the 10-year treasury moved up to 2.10% today -- was 1.85% on 4/17. O has been in a downtrend since 3/23, when the 10-year touched 1.88%.

    The chart remains negative by the RSI and MACD indicators, but there is support @ $46. Price of O may be approaching oversold, and a turnaround is possible. If $46 does not hold, there is considerable support in the $43-45 range.

    JMO.
    Apr 30, 2015. 12:36 PM | 3 Likes Like |Link to Comment
  • Omega Healthcare Is A Classic Textbook Model Of Repeatability  [View article]
    Low of $36.10 so far today.
    Apr 30, 2015. 12:15 PM | Likes Like |Link to Comment
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