RE:RE:Think about it:dsark wrote: tollmilling wrote: Lowest P/AFFO
Soon to be Lowest Debt/Gross Book (targeting 0.4)
High Yield 7-8%
Low Payout Ratio
Highest Discount to NAV
This is correct but for a REIT you might as well take on more leverage then 40% of your Buildings since interest rates are historically low. They are doing the same garbage that OPEC & Russia did, they opened their traps and talked oil up. Oil rebounded now, now everybody is ramping up production even more. How is that going to end?
What did D management do? Talked up this 3 year strategic plan, lower debt, share buybacks, disposing properties. Except, now they hadn't bought any shares back. They talked the share price up, same as OPEC talked up oil with the Doha meeting.
Here is my take, two scenarios:
1) Management sells non-core assets (reduces AFFO) but pays down debt (increases AFFO slightly via interest savings). This is a net negative IMO because AFFO will fall from selling buildings then it will increase by reducing interest on debt. I guess as long as they sold the buildings for cost (with zero gain or loss), this wouldn't drain NBV unless they impaired some of their buildings (which they did). I can't see NBV appreciating doing this. This is why RBC cut their target by $2 to $22 IMO.
2). What I wanted to happen. Sell non-core assets (reducing AFFO), pay down some debt on only the highest interest, and buy back a stupid amount of shares. The decrease is AFFO is more than offset by the increase in AFFO from share buybacks. When you buy back shares at the price of 2/3's the book value, this causes NBV to go up. The greater the discount the better. This would INCREASE AFFO & NBV unlike what we saw from Q1 results. Share price would be a lot higher IMO.
And the question becomes... do you want to own something on the hope that they do this? Or own something that is actually doing what they said they are going to do? Which means sell D.un and that is what I think we are seeing. Some are dumping the shares because they seem to not be truly focused on increasing shareholder value as they said they will do. I am going to continue to hold my shares, but I am not going to be purchasing additional shares. My cost base is $19.40, Im ok with that for now. I had a very large gain on this after I bought at $15 or so and sold at about $20 a while back, so it doesnt owe me anthing really and like I said Im not worried long term even though the shares may drop off, its only 4.6% of my holdings.