market folly

We're posting up notes from the Invest For Kids Chicago conference 2015.  Next up is Andy Greenberg of Saker Management who pitched NXRT.


Andy Greenberg's Invest For Kids Chicago Presentation

•    Event driven firm.
•    Idea is NXRT.
•    Externally managed REIT spun off from the NHF closed-end fund.
•    Class B rental pricing driven upwards. Class B units negative.
•    Advisors own 16% of stock and can own up to 25%.
•    Focused in Dallas and Atlanta, expanding elsewhere.
•    FFO $1.28 per share. Should be around ~$1.4. 30% of market cap in cash. Reserved for renovations/upgrades.
•    FFO - $1.6 by 2016.
•    6% div yield. Under 10x FFO.
•    Larger comps over 20x and smaller comps low double digits.
•    Valuation challenge – market cap, gross leverage high, variable rate debt and potential rental rate pressures in a recession.
•    Think leverage manageable, shorter holding period dividend covered at higher rates.
•    Think portfolio could be sold, private market transactions at higher prices. Company is frustrated with stock performance.
•    Poorly conceived structure out the great. Better in a private structure.
•    Advisor fee can be cancelled with no fee to the advisor.
•    CEO of Highland owns $45MM of stock.
•    Think this could trade higher than $20 by Fy17.


Check out the rest of the presentations from Invest For Kids Chicago 2015.