Geoff K. Dancey, CFA
Geoff K. Dancey, CFA, is president and portfolio manager, Cutler Capital Management, Worcester, Massachusetts, which manages $325 million. CutlerCapital.com
Today’s Stock of the Week is a real estate investment trust that formed earlier this year. It’s not well-known on Wall Street but is already an impressive company.
Colony NorthStar Inc. (CLNS) is a real estate investment trust (REIT) created in January 2017 by the merger of three public companies. The predecessor firm—Colony Capital—was one of the largest private-equity real estate funds in the world. But the newly formed REIT is not yet well-followed or understood.
The company’s high dividend of $1.08/share/yr., recently yielding 8.2%, appears sustainable, and there is a $300 million share-repurchase plan in effect to take advantage of the discount to net asset value. Colony invests in a wide variety of commercial real estate, primarily in North America and Europe. It divested a portfolio of some debt and equity and is reinvesting the capital it raised.
Revenue of $1 billion last year likely will grow to $2.7 billion this year and $2.8 billion in 2018. Funds from operations—a more accurate measure of performance for REITs than earnings—were $1.92/share last year…will drop to $1.50/share this year because of shares issued to finance the merger…and should rise to $1.60/share in 2018 because of the share buyback and solidifying of the new structure and operations.
Fiscal year: Dec. Earnings per share: 2018 est./$0.65…2017 est./$0.36…2016/$0.56.
Geoff K. Dancey, CFA, is president and portfolio manager of Cutler Capital Management, Worcester, Massachusetts, which manages $280 million. CutlerCapital.com
