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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Wallace Rivers who wrote (22468)	11/11/2005 12:16:39 AM
From: Spekulatius	Respond to of 78576

Wallace, funny that you mention MLS. I have indeed followed it closely, as i though of it highly, as did many analyst. MLS is one of those REIT's that have become growth investments. Instead of just passively collecting an ever increasing rent, they have taken on a huge swat of development projects, some in joint ventures, and some internationally. Apparently MLS' management has taken on more than they can handle and costs and timeline for those project are spinning out of control. MLS balance sheet looks very stretched, free cash flow is very negative. Interest costs are eating up about half the net rents (Rents minus recoverables). Because of the leverage (around 5B$ in debt, including preferred stock) MLS' net present value is very dependent on it's cost of capital, which is bound to increase (because of floating interest loans and a higher risk perception by lenders). Based on the financials, i do not believe that they can keep the dividends at the current levels. Some value could be created by having MLS acquired by a company with a better credit, which essentially would lower their cost of capital. if they remain standalone,I believe there are more shoes to drop (Dividend cut / raise capital), so i am not ready to jump in yet. At some point, i believe you are correct and MLS could become a very interesting value play, as many of their properties are high quality.

To: Wallace Rivers who wrote (22468)	11/11/2005 6:44:10 AM
From: David	Respond to of 78576

Re: MLS WOW! Look at the compensation paid to the executive bench. Unbelievable! I know nothing about MLS, but just happened to glance at the executive compensation as reported by Yahoo. Nice 6% yield though. Wasn't this one of the RIETS that Warren Buffett purchased during the last RIET trough?