Some CBL Charts

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REITs, Special Situations, Bonds, Preferred Stock

Contributor Since 2008

Rubicon Associates is headed by a Chartered Financial Analyst charter holder with over 20 years of experience in the investment management industry focused on the analysis, investment and management of fixed income and preferred stock portfolios. Over the years, he has analyzed and invested in both public and private companies around the world as well as advised institutional clients on fixed income strategies and manager selection. The principal has been responsible for managing nearly seven billion dollars in credit investments across the capital structure and overseeing the research and trading of credit market activities. Rubicon Associates has written for Seeking Alpha, Learn Bonds, a newsletter and TheStreet.com in addition to advising institutional and private investors.

Summary

  • I continue to watch CBL to see if there will be a catalyst for a change and, ultimately, how this REIT survives.
  • As a result, I look at prices, yields and spreads between their cap structure instruments.
  • These are some of the charts generated.
  • Not a lot of talk/analysis here, but charts I don't see elsewhere.

CBl (CBL) equity price (obviously ugly):

Which creates a tempting, but fundamentally ugly yield:

Market is betting on a divvie cut, which the REIT has said they will do if taxable income (REIT constraints) allow.

This, of course, pressures preferred stocks:

And the resultant yield:

Note that the spread between the D (CBL.PD) and the E (CBL.PE) is off its wides, but still favoring the Series D.

The spread between the equity and the preferred (the higher yielding Series D) is at its wides, again due to the div cut projection:

The dividend of the equity as a multiple of the preferred dividend, just to show the point differently.  2x is big.

The CBL '24s (bonds) yield-to-maturity:

In case you are wondering how they compare to Washington Prime (WPG) 24s:

The yields of the complex: (sorry, forgot the title!)

Preferred/bond spread:

The cap structure is just plain ugly and wide.  One might think it favors the equity, but a div cut will change that (would also expect a price cut, as the REIT should have a 12-15% yield on its equity).  Bonds are interesting, but another round of ratings cuts is coming, the business position warrants a weak BB or B rating.

Just my two cents:  Dilute the equity but cutting the div and paying with shares, defer the div on the preferred and buy back debt with some of the savings and redevelop with the rest.  Better dilluted than dead.  Oh yeah, this might also help get a bank line when it has to be renewed.  Moving to a C corp wouldn't hurt either. 

Disclosure: I am/we are long CBL.PE.

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