I've been pretty out of touch with the REIT world for the last few months (too much freelance work that consumed all my free time). A few days ago I scrounged up enough cash to buy a few shares of something. When I bought CLP last year I could only afford 20 shares at the time. I've been happy with the dividend and I hadn't seen any bad news coming from the company, so I was thinking of buying another 20 or so shares. Then I saw the announcement of the merger. Does this sound like a good move for CLP investors, or a bad one? As I say, I haven't been following CLP (or TCR) closely since Spring. 20 shares aren't much, so I'm not taking on a lot of risk here, but if this merger sounds like an awful idea I can put the money to good use elsewhere. Big mergers in the tech world often signal the beginning of the end, or at least years of muddling through (see HP/Compaq). On the other hand, some have worked out well (IBM/Lotus). If TCR has been firing on all cylinders, then this may be a good acquisition, but if it has been struggling, then maybe not. Has CLP taken on too much debt as a result?Opinions?Mark.
I don't know the specifics of this one, but investors have been scared of recent large mergers; however, GGP and UDR have almost recovered from the initial drop in stock price with a merger announcement. I have no money to buy anything right now, but I think CLP might be attractive as I suspect there will be some bounce back over the next month or so.brucedoe
>>>>I have no money to buy anything right now, but I think CLP might be attractive as I suspect there will be some bounce back over the next month or so.Bruce: Thanks for the response. I guess the real question is how much will it drop before the bounce? So far today it's down 3.4%.Mark.
I have never owned a stock to be involved in a merger/buyout. I have small a small amount of TCR (up 25%!!!) so will my existing shares in my account simply change over to CLP when the deal is done?-canamGo Reit board!!!
I have an investment in CLP. About a year ago I bought a small amount, received the stock certificate and joined their stock purchase and dividend reinvestment plan. I have been adding qtrly since that time at a 5% discount and now have about a 14% gain (was 18% before the news). I was very happy with its performance, but now I don't know what to think. I would not generally be upset about the stock price falling, as It would mean my reinvestments would be a at a lower price. However I have two concerns about their purchase of TCR. First, I am not too impressed with TCR's performance (Its dividend climbed from $.25/qtr to $.28/qtr over 5 years and then dropped to $ .20 and there it stayed for the last 6 qtrs). Also, I am not sure of the timing. The high inflation everyone has been predicting to help apartment REIT's has not happened. With the 10-year at 3.95% now, I am wondering when higher inflation will happen. Although a lot of apartment REIT's have had price run ups recently, TCR hasn't. I also don't know if that is a good or bad sign. I suspect bad. I am not going to sell CLP, but I am not sure I am going to be adding to it.Norm
Norm:"... TCR hasn't. I also don't know if that is a good or bad sign. I suspect bad."I am inclined to agree with you.I also have owned CLP for a couple of years now and added to one of those times it dipped to 38.Regarding inflation ... Have you bought any building materials lately ??I'm an owner-builder and seeing no relief.CLP may see TCR as an assets-at-a-discount play.Because CLP is not offering much/if any premium for TCR ... and has pledged to maintain our dividend while they absorb TCR ... I am perfectly willing to continue to be paid while I wait and watch :)---alan
Once one accepts that CLP has never been and has no aspirations of becoming a REIT 'Gazelle' ... and after listening to the conference call, I find I am a much happier camper.1. The TCR acquisition will be accretive to 2005 FFO2. CLP will be maintaining the current dividend policy3. The TCR acquisition will decrease the 2005 FFO ratio to approx. 71%4. CLP plans to protect its current 'Investment Grade' rating.This appears to be a big bet on the apartment market in Texas finally turning around ... or at least not getting any worse :)One assumes they are making this 'company changing' acquisition because they feel Retail has peaked ... Office is going nowhere ... and Apartments (at least TCR) have stabilized and are starting to show evidence of an upturn ...The CLP website has posted the URL for the conference call as well as a supplemental info package.http://tinyurl.com/5vxdy---alan
>>>>Because CLP is not offering much/if any premium for TCR ... and has pledged to maintain our dividend while they absorb TCR ... I am perfectly willing to continue to be paid while I wait and watch :)Alan: That's the way I'm leaning at the moment, too, pending any negative revelations.Mark.
Colonial Properties Expands Into Western States; Enters Four High-Growth Markets BIRMINGHAM, Ala., Oct. 26 /PRNewswire-FirstCall/ -- Colonial Properties Trust (NYSE: CLP), a real estate investment trust (REIT) that owns a diversified portfolio of multifamily, office and retail properties, today announced that it entered into a partnership with DRA to acquire a total of 16 multifamily properties in Albuquerque, Phoenix, Tucson and Las Vegas. The Company acquired a 20 percent interest in the partnership and will handle the property leasing and management of more than 4,200 units. This transaction expands Colonial Properties' relationship with DRA to 16 joint venture properties, totaling 4,223 units. http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=clp&script=410&layout=6&item_id=635614
CLP at a discount today ?CLP pays a .67/sh dividend. Wednesday (tomorrrow) is this quarter's X-Div date.> See the SEC site: http://www.sec.gov/answers/dividen.htm. > "If you purchase a stock on its ex-dividend date or after, > you will not receive the next dividend payment. Instead, > the seller gets the dividend. If you purchase before the > ex-dividend date, you get the dividend."And the stock price has been in a downdraft since the merger announcement.And, as ? ? Desertdave ? ? has just pointed out, CLP has just announced another deal.They have set themselves up for a very busy 2005 :)---alanwho has collected quite a few of those .67 dividends, is looking forward to a lot more, and already has a full position in this stock.
DesertDave:I was trying insert your html 'Music' code ... It looked fine in the preview mode but then, morphed into "??" when I submitted it.Let's see if it works any better the 2nd time :)♪ ♫ DesertDave ♪ ♫---alan
I went ahead and bought those 20 shares of CLP yesterday (to get the dividend), at $40.24. The price ended up drifting lower by another 56 cents afterward, but is back up a bit so far this morning.So far, my purchase is off to a rousing start, down 2%; but I expected that, given the recent unsettling news. However, as long as management doesn't go back on its word to maintain the dividend, I won't worry about the share price too much. Sure, they may not increase their dividend angain anytime soon, but how many other high-quality REITs are paying 6.75% at the moment (or anytime soon)? (Not to mention that I'm still getting 8% on my original CLP purchase--7.2% overall)Mark.
Mark:I know what you mean about 'rousing starts'.But I have gradually come to understand that when you are choosing to buy during a downdraft, that sort of thing goes with the territory. The good news is that you did not have to pay up in order to capture the dividend :)My two recent purchases, EXR and KRG both dipped a bit after I had taken my positions. That was a couple of weeks ago, and now EXR is up nicely and KRG is at my breakeven.AFR is/was on my list, and I should have been paying more attention when gracepeace announced his purchase...---alan
I don't have anything to add to this thread specifically about the Colonial/Cornerstone merger, but I've exchanged a few e-mails with 782gear about the impact of the Sarbanes/Oxley costs that all public companies are having to bear this year (and for the next umpteen years). Gear points out that these costs are apt to be very high on an annual basis, not even counting the costs of distracted management teams. Indeed, this topic has been discussed on a number of quarterly REIT conference calls, and most of the management teams have indicated frustration with the outside costs and tons of extra paperwork. One issue here is whether the smaller public REITs are apt to be hit a lot harder, as a percentage of revenue and G&A expense, than their larger peers. Indeed, Simon's David Simon, on last week's conference call, noted that the incremental costs for SPG this year are apt to exceed $1 million, but that the costs for Chelsea, which it acquired in mid-April, were half that size -- though Chelsea was only a quarter of the size of Simon. What does that tell us about the (disproportionate) costs to even smaller REITs?One implication of this is that some of the smaller REITs may decide that the large relative costs of Sarbanes/Oxley compliance, and possibly the excessive amount of time of management worrying about all of this, may drive some of them to seek a merger partner. Could this have been a contributing factor to Summit's agreement to be acquired by Camden, or Cornerstone's willingness to be gobbled up by Colonial? I don't know. Certainly there are other large factors at work here, not the least of which is the view of some REIT management teams (and Boards of Directors) that real estate is selling at very high (and unsustainable?) prices these days, so why not retire at the top of one's game, take home a huge payday and, in the bargain, thumb one's nose at the SEC and accountants? Furthermore, I would think that, with the humungous interest in real estate by large pension funds, these guys could rather easily put together new ventures to acquire and manage real estate as private companies or ventures and be well-compensated.That said, I don't have a strong opinion on whether or not we are apt to see a large wave of consolidation in the REIT industry, nor any opinion on whether investors can make money speculating on takeover candidates. Indeed, I have never thought that one should invest only on that basis. But, who knows? Perhaps yet another smaller REIT will be taken out before the ink has dried on the Cornerstone proxy statement.Ralph
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