NRF/Jabob - LOL, OK, I guess it's been a month - let's see what's changed from last time (6/8):
NRF/Jabob – Certainly I still like them but, like all trusts, they are selling off in anticipation of rate rises hurting their margins. I'd say there may be more of a bottom after the Fed finally announces an official tightening, so you may want to be patient. Last time we discussed them (4/23), we looked at a conservative play, selling $17 calls and $15 puts. Now they are testing that $17 line but I still think, over time, it's a fair range.
So, it turns out that waiting was the way to go and now the question is, has anything happened to make them less attractive since 6/8? They did a presentation in mid-June and that obviously didn't go well and they bought an office tower in Frankfurt for $611M and I question the timing on that and they floated some notes in Europe at 4.6% - nothing drastic but no positives.
Leverage Philosophy: While NRF leverage might appear to be high at ~60 percent, only 6 percent is recourse debt, with the balance being non-recourse property level debt which "helps to compartmentalize debt obligations and minimize overall risk."
Tylis anticipates NRE will be capitalized "south of 40 percent debt," consistent with its European peer group, where higher multiples make high leverage unnecessary to generate acceptable returns.
Certainly nothing there I don't like. I think, overall, they are getting pulled down by the sector still and still I don't think that stops until the Fed tightens and people begin to relax about it. $15 is still where I'd put my foot down on this stock and that's not to say it won't get worse but down at $10 I'd be banging the table anyway.
