Bob, re. REITs, yes I still own HRP, and I agree that it appears to offer a far lower risk of a dividend cut than SNH. You are correct that at 16%, it is paying double the yield of other office REITs. That's because the stock has slumped very badly after HRP spun off half of SNH.
I would be happier if HRP had spun off all of SNH. They blundered badly by not doing so. They knew that the market was penalizing them for owning some nursing homes, regardless of how few they were. The market, then as now, considered a nursing home, however insignificant in comparison to the REIT's other holdings, to be poison. Whether 1% or 99% of a REIT's holdings, a nursing home kills the stock price. They knew that. So they should have gotten rid of them all. But they didn't. They did a spinoff of the nursing homes into SNH, but retained half of SNH. So, they still have the poison.
What you have in HRP is an office REIT, with a management that has two big strikes against it: it blundered badly in its most important recent strategic decision, and (as before) it is also beset by a conflict of interest that most other REITs don't have. If I were given a proxy with a resolution to kick the dummies out, I would certainly vote to do so.
Given my opinion of management, I find it difficult to recommend HRP to anyone, regardless of how high the yield might be. |
