It has been a good few days for me so far this week in the markets. Yesterday Kimberly Clark rallied big on earnings and followed through today. Today Boeing smashed the estimates and soared like their famous new plane that has been delayed many times the 787.
Then also this morning ARCP announced a proposed merger with COLE. I own shares in both companies and they had been fighting over COLE turning down a couple offers from ARCP in the past that resulted in ARCP CEO Nicholas Scorsch calling a COLE executive a liar I recalled reading in the past. There is a offer on the table and I would have the option to receive a specified amount of cash per share for my COLE shares or 1.0929 shares worth of ARCP for every COLE share owned. I think I would likely take the shares as with all the ARCP acquisitions and mergers this will make them the World's largest REIT. It would result in an enterprise value of $21.5 Billion Market Cap and the dividend will be raised again to boot. I can't argue as a shareholder with raises in my monthly dividend income and a stronger portfolio and company for leverage in the REIT industry. I am considering trying to add to these positions in the future as both plan to continue normal operations and dividend payments until the merger is completed. I'm still trying to read and learn about the details of this merger, but also looking for attractive income producing securities to welcome to my account.
What about you? Having a good week with earnings? Own any ARCP or COLE?
I own ARCP. :) looking forward to the dividend increase.
ReplyDeleteFFdividend,
DeleteGood to have you as a fellow shareholder. Whoever doesn't like the increase in the dividend is welcome to send me more shares/dividends!
The dividend increase is nice. I am a little worried however that ARCP is growing tooo fast. Hopefully the rapid dealing does not result in shareholder losses. I am usually skeptical of management that wants to grow as much as possible - their goal is not to build an empire for themselves but to generate shareholder returns.
DeleteOn the other hand, based on forward FFO however, ARCP is pretty cheap vs NNN and O. It is not proven itsell ( doesnt have as long of a record) as O and NNN.
So if you think mgmt will execute well absorbing the new assets, ARCP might be a good add. I am holding it, and hoping for the best. If dividend is stable or growing, I am holding. If dividend is cut however, I would probably be out the door ASAP.
Dividend Growth Investor,
DeleteI agree with you and hope they are able to look out for the shareholders. I have to give Schorsch the benefit of proving that they are capable of performing anywhere near O and NNN. I own some O in my taxable and my ROTH IRA and NNN in my Roth IRA.
I've been holding on to ARCP and plan to indefinetly. A dividend cut may change things, but I hope that does not happen. Time will tell whether they can prove those with reasonable doubt the merits of this expansion. As long as shareholders and dividends are looked after I'll be happy to own a part of this business. The share price may increase and take care of itself as they execute. Glad to have you as a fellow shareholder!
Thanks for stopping by and take care.
I own ARCP and am not sure what to think about this COLE merger. Scorsch wants to grow big no matter what and I greatly dislike the private REIT build up that the public REIT buys.
ReplyDeleteWhen a private REIT takes on property management can get bonuses and commissions. Then they have ARCP buy out the private REIT and get a second bonus. This is my assumption I do not know for sure but i cannot think of other reasons why they would do this. COLE is the same no doubt. They were private, went public, and now are open to being bought out.
ARCP wants quantity and my fear is they will sacrifice quality. Their 2014 estimates for FFO was $1.05 - $1.09 so we are only getting roughly a 5% raise in FFO and the dividend for this. When I look at how Realty Income Corp grew itself over the years it was far better growth for existing shareholders.
I'd also add that ARCP had a 6% gain at the open on this news and it sold off on heavy volume almost instantly. Lots of profit taking and share priced ended the same as the previous day. This tells me the market isn't seeing this as such a great deal or the buying pressure would have pushed up that.
DeletePulling Myself Up
DeleteDo you think the COLE shareholders will be able to fight out a better deal?
I thought Schorsch was trying to internalize management and get rid of the property management bonuses recently. They both have 100% or very close to 100% occupancy with their properties. I think the dividend raise may be conservative and leaves room for steady quarterly increasees just like Realty Income always does. I definetly still like O and wish never sold the first time and instead loaded up when it was trading at $18.
DeleteStill am very happy I am back in as a shareholder and have a nice gain with growing monthly dividends.
I think COLE is no better then ARCP that they held out the merger when they were private so they could get double bonuses for their management. Thats what they are in it for and they'll do the merger now. Not sure if there is a better offer that could come there way.
DeleteNo I don't own ARCP or COLE, but I am evaluating ARCP along with some other REITs as potential replacements for one of my holdings. I'll probably add a new REIT soon. ARCP has many qualities I look for, I'm thinking about it.
ReplyDeleteCI
DeleteHow is it going? I know you were gone for a little bit, glad to see you back! Yeah I've liked ARCP originally for a lot of reasons that have to do with thinking they may become the next Realty Income type company and followed similiar dividend raise patterns for a little while. Once they close some of these acquisitions we can get some nice raises for awhile.