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No. of Recommendations: 8
Martin
Ok....I downloaded 10Q of operational interest expense (the cost of their debt) and 10Q of CFFO, from which I calculate the trend in the ratio [Interest Expense]/[CFFO + Interest Expense], using rolling 4Q. This will tell you how much of their operational cash generated from they investments they've made (much of it funded with debt) as a % of their operational cash BEFORE the interest expense is deducted.


4Q17 27.6%
1Q18 27.1%
2Q18 26.8%
3Q18 28.5%
4Q18 29.0%
1Q19 31.8%
2Q19 32.2%
3Q19 30.1%


this is not a good progression in their REIT's cost of debt. In my travels, anything above 25% = a flat dividend. Anything over 30%, a cut to the common dividend is a definite possibility.

But this will likely not affect the preferred dividend...unless this ratio starts pushing 40%, as the company at that point is going to have to start retaining all cash to meet their debt obligation.

You can do the same calcs if you have access to Mergent.

BruceM
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