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

To: Wallace Rivers who wrote (36437)	1/12/2010 7:35:31 PM
From: Tapcon	1 Recommendation Read Replies (2) \| Respond to of 78751

GOV has been discussed over on the Dividend Investing for Retirement thread. Here's a link: Message 26198359

To: Wallace Rivers who wrote (36437)	1/12/2010 8:30:35 PM
From: E_K_S	Respond to of 78751

Hi Wallace - HRPT Properties Trust (HRP) originally owned the properties and still maintains an ownership interest (around 50%) so you can look at some of their filings for the GOV IPO and the properties that were transferred to GOV from HRP. I would rather own GOV than HRP (I own HRP preferred shares and a few shares of the common). The common shares of HRP that I sold (as well as some proceeds from my Vanguard GNMA fund), I am replacing with GOV shares. I believe the dividend is solid and even could be increased. The bull case for me is that the rental income could increase if inflation starts to move higher otherwise the 7% dividend is much higher than what I am currently receiving in my Vanguard GNMA fund (about 4%). I am using the position as a hedge against inflation since you own actual real estate with excellent tenants ( government municipalities). The properties being purchased now are at depressed values and once the cycle turns in 36-48 months, its possible they could be 20%-30% higher. The upside for the stock is no more than $30.00/share-$35.00/share and will probably be driven to these values once GOV can show higher rents (once the lease renewal cycle occurs in 24 months) and they start distributing higher dividends. My overall position is quite small compared to my GNMA holdings. GOV is NOT a GNMA equivalent but I am willing to take more risk for the higher dividend yield. I do know as the FED increase interest rates my GNMA share price will fall. I have a 9% capital gain in my GNMA fund and plan on peeling off 10% of my shares which will find a home in GOV. EKS

To: Wallace Rivers who wrote (36437)	1/13/2010 10:19:40 AM
From: E_K_S	Respond to of 78751

More info on GOV - I located the prospectus that was filed for the initial IPO for GOV: sec.gov Here are some pictures of the 29 properties in the portfolio: sec.gov sec.gov ================================================================= Some analysis: HRPT launches IPO for new REIT to invest in regional properties leased to government tenants baltimorerealestate.citybizlist.com From the article:"...INVESTMENT HIGHLIGHTS Strong Credit Quality Tenants. Approximately 89% of Government Properties Income Trust pro forma rental income for the twelve months ended March 31, 2009 was paid by the U.S. Government. An additional 6% of pro forma rental income in these twelve months was paid by the States of California, Maryland, Minnesota and South Carolina. Government Properties Income Trust's future investments will be focused on properties that are majority leased to government tenants, the belief being that government tenants generally have strong credit characteristics and are less likely to default under lease obligations than commercial tenants. Accordingly, for investors, expected distributions may be more secure than the distributions paid by many other REITs...." "...Favorable Lease Renewal Experience. Based on RMR's experience, properties leased to government tenants are typically relet to the same tenant or another government tenant. During the period that RMR has managed the 29 properties that comprise Government Properties Income Trust's initial portfolio, all of the government leased properties that have been relet were relet to a government tenant...." "...Growth Potential. During the past 40 years, the amount of GSA owned space has remained relatively constant, but the amount of GSA leased space has increased from 46 million square feet to 178 million square feet. Due to the large amount of space currently leased to government tenants, and the belief that government demand for leased office space will increase, Government Properties Income Trust will have significant opportunities to acquire additional properties that are majority leased to government tenants...." IPO Overview: Government Properties Income Trust seekingalpha.com ================================================================ My take was a bit different in that since HRP still owns 49% of the GOV shares, HRP has a vested interest in seeing good overall performance in GOV. HRP management still receive a lot of their compensation in stock options, so they have a vested interest in seeing the common shares perform well. I would like to see the vesting of their options be modified so that they are fully valued when exercised at higher values and are held for a longer period of time. This way management maintains a long term perspective when making their property buy & sell decisions. EKS