FreeMkts

Cedar Fair: Growth Opportunities in Amusements

A. Chi
And with plenty of cash flow to pay down debt, they will be A-OK. Lenders are not going to force bankruptcy when they can see plenty light at the end of the tunnel. In time every one gets paid handsomely.

Cedar Fair: Growth Opportunities in Amusements

Should be able to pay down 100M to 200M per year of debt after suspending the dividend. Enterprise Value of 2.1B of which 400M is equity. Two years of debt reduction should translate to doubling the equity value. That is if the economy stays in the toilet.

Pay off half the debt over five years before reinstating the dividend. If enterprise value stays the same, stock holders get 3X appreciation. With half the interest expense they could pay out $2 dividend easily.

How do you knuckleheads think LBOs work? Same thing here without the buy out.

Two Stocks with Market Caps Over $250 Million that Sell for Under $10

If FUN hits bankruptcy, sign me up for a GGP type of opportunity. Cash flow is being redeployed to pay down debt. It is the responsible thing to do. If you want to critique the author, ask why he is not aware of the pending suspension of the dividend.

Strategic Hotels & Resorts: Only for Long Term Investors

Prefs at 50% discount to par versus stock at 45% discount to book? Preferred has similar upside, more protection on the downside and significantly better dividend/cash flow outlook.

Any other suspended dividend preferreds with similar prospects? NCT, FCH, MPG all look suspended but have not looked closer at fundamentals yet.

Strategic Hotels & Resorts: Only for Long Term Investors

Recent sale of Mex City property at a profit (8% over book) only bolsters cash position to ride this out. Looks like total preferred outstanding is about $360M vs. $1.7B long term debt and $200M market cap. Plus preferreds are trading at 16%+ current yield (once dividend reinstated) with at least a 16% goose with cummulative function. Book value of $4.70 is likely understated but represents a reasonable upside expecation on the common. For preferreds it shows liquidation would have be at more than a 15% discount to book before the Par Value is compromised.

RNP's Investment Strategy Is Inherently Flawed

So you place no value on C&S's ability to opportunistically choose between preferred and regular shares? Is it not an opportunity for a long term investor to purchase at a larger discount to NAV? Investors stand to benefit if the discount to NAV shrinks providing insulation from market downside. Likewise the expansion of the discount accounts for a significant portion of the funds underperformance. You also ignore the 40bps lower expenses than peers.

Cohen & Steers are solid real estate experts although the sector has been turned on its ear. I see value in their ability to move along the capital structure to diversify and take advantage of opportunities. Style purity is not the only way to invest.

Three Below Book, High Yield Stocks

OSK is a buy regardless of how you define their BV. They will survive the downturn and thrive once things turn around. You would think we will never need fire trucks, garbage trucks or heavy duty military vehicles ever again.

The Great REIT Unravelling Begins? Simon Property Group Defaults on Loan

Debt, Debt, Debt. Look at the traded bonds and preferred stocs in just about any REIT, especially for income investors. Huge YTMs abound. The thesis above that most will survive but equity is toxic sends you to the debt markets for the opportunity! Many preferred stocks also offer cummulative dividends, so if they cut the dividend to hoard cash they will have to pay it all back when they reinstitute the dividend. Stock dividends get cut or paid in stock where bond interest payments are not negotiable.

CRE market screwed itself (again) b/c financing is traditionally short term for these long term assets.

Idearc and Crusader File for Bankruptcy

They were cash flow positive with $10Bln debt and now it is reduced to $3bln with $360M initial annual interest. They reported $1bln of EBITDA last year.

Using 2/3rds of cash flow to pay down debt above the $60M per year amortization makes for fast repayment of the reduced debt. The bank gets their $3Bln back in four to five years and probably owns over half of a cash cow with $0 debt and somewhere between $500M and $1B free cash flow or $300M to $600M after tax income. A modest 8X earnings multiple values the company at $2.4 - $4.8B once the debt is cleared.

Should be interesting to see what the unsecured debtors get since they are hosed out of their April 15 interest payment of about $115M (which is about equal to what you could buy that entire traunch for). If even get 10% of the equity they probably double their money over a debt value of a nickle on the dollar.

Auto Bailout, Take Four: A Dangerous Precedent

Government firing any private sector employee scares the hell out of me. Look how well Govies have run Fannie and Freddie? The time for prepackaged bankruptcy is gone. We are committed to propping up these crippled companies for at least four years. So where is the opportunity? BONDS. At this point, aren't GM bonds good as long as Govt backs the company? The stock is toxic waste but the bonds maturing within four years look very attractive to me.

At the same time, what is the implication for Ford? They should be at a competetive advantage without government in their business. GM will fail in the long run, especially with government dictating their product lineup. Plus, they have a government backstop if all else fails. However, you know every government vehicle will be GM in the foreseable future. Again, hard to see how Ford bonds maturing in three years or less don't get paid back.

General Growth Properties: Debtholders Try to Avoid Chapter 11

Banks cannot afford to push bankruptcy here, especially with an easing in mark-to-market on the horizon. Restructure with longer term debt to stabilize the company and you dodge a big write down. GGP liquidation will sink values across the country

What about the Rouse bonds that are availble to retail investors in the open market? If we think equity can survive, shouldn't these bonds have a good recovery? Not sure where these land in seniority or if they are tied to specific assets but they are the only other instrument I see to exploit the GGP situation.

3/15/09's trade under 30 cents
4/30/09's trade @ 30 cents
9/15/12's trade under cents
11/26/13's trade under 30 cents
40% to 60% YTM on the 12s and13s.

Obvious questions of how the terms change in restructure but a strong 3x upside in par value plus strong current yields. Not the insane potential of the equity but a lot harder to lose your tail.

Any good sources for REIT balance sheet structure would be much appreciated. I also don't think there are reporting requirements for bond holders like there is for stock. It would be interesting to see if Pershing Square or Bucksbaums were loading up on GGP debt in a addition to their equity positions.

REITs: Risk Perception and Prospects

Does anyone on these boards understand capital structure? Right now you can buy debt on many REITs at 40% to 60% discounts to par. Add up the current market value of all debt plus equity and the valuations are so far below book it is amazing. DDR is a great example because they are one of the few companies with decent debt strucuture info in their presentations. Even valuing their mortgage bonds at par currently, their total book value is $8.9 billion versus less than $5.5 billion market value of all stock and debt. Plenty of room there for the Mad Bear Hedge Fund Manager's dismal outlook. Forget the equity and evaporating dividends. "Settle" for 12% - 30% YTMs in REIT debt and preferred stocks.

I don't see how the stocks can dramatically recover before these anomolies in the debt markets are corrected.

Are 'Phoenix' Stocks Getting Ready to Rise?

Preferred stocks and debt of these types of stock are also interesting and pay very handsomely for those that limp along and survive without the stock recovering. HUN debt trades for 40 cents on dollar and they have $1 billion in the cash. Not sure if the stock will ever recover but that bond holder can do well with a lot less risk over the next 4-6 years. DDR preferred stock has a 30% current yield. Different strategies for survive versus thrive businesses. I would like to see more articles on how to play capital structure for various companies.

Dividend Cuts Continue to Grow

In this credit environment it is hard to fault a company for cutting dividends. Especially if they have any debt maturities in the next two or three years. You just can't assume you will be able to refinance any more.

General Growth Properties and the Commercial Real Estate Time Bomb

At some point logic has to prevail. GGP is playing an enormous game of chicken. Debt SERVICE is not the issue. Cash flow is there. Would banks rather refi loans and eventually get paid or force bankruptcy and liquidations when there is no market for properties of this size. Plus GGP is a quality management company and the properties are likely less valuable managed by someone with less operational expertise. All of this is regardless of the fact the intrinsic value of underlying assets likely exceeds the debt even in a depressed market.

How many people could pay the bank if they called your mortgage tomorrow, or even with two years notice. People and businesses have to work under the assumption they can refinance. Those well versed in bankruptcy law will do very well over the coming years, especially when playing across the capital structure.