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Gentlemen/ladies: I have not been on this board for a long while but have been involved with Gramercy since 2007. Rode it down a bit, but it has treated me VERY well since. Patience paid off especially with 5 years of accrued perf divs. This company is not the same as it was several years ago. The new management has done all that it has promised including changing the operating plan and executed well so far. Although I would be delighted to see it reach the old highs since we still hold a large positions on common, plus some perf A, I think that talking the 30's is out of range for a very long time. Optimistically I could see 7+ by the end of this year, 9 to 10 in 2015, but 30---perhaps in 5 years if the stars are in alignment and DuGan keeps growing the company. Just my opinion. Good Luck and I secretly hope you are surprisingly correct!
Appreciate your sentiments Matt, but I HAVE been waiting for 5 years and that I'd say is a long term outlook. I have sold half of the prf A position and taken it as capital gain. Prudence rather than valour? I told myself I would be patient, but 5 years . . . I can only hope that as you indicated the credit facility facilitates handling long past obligations. It has to help the common share price too. There is just so long that the deferral can go on. A point: Is our "prfA elected BOD" member alive, let alone aggressivily representing our interests? Don't get me wrong, I still have a lot of common so I am tied to the future of the company. Plan . . . a voice from the past. Glad you are still kicking too.
At least I got the large tax provision issue answered. It still seems that, although better, the company's financials are still a complicated puzzle. CDO intersts still seem very much a moving target. An Upbeat, but "give us some more time" type call?
I did check the balance sheet and to me it looks like if they did pay out what they owe that the cash left to "deploy" would be the mid-teens millions number. I do not know how low DuGan is willing to let the cash level decline--one would think they would want some level of a cash reserve. You might be correct on the perf divy catch up if they get a credit facility--in fact, it might be a requirement to get the size line they are looking for. I still hope/think that they will have to get right with the perf holders in order to grow the company past about where they are and preserve credibility for investors. Dilution would also not please me at this point since unless there is a really outstanding deal in the wings, the price to existing holders would be higher than it need be. I'd feel better about a secondary issue if the common stock was at 8 or 9! As you said DuGan has been faithful to his word so far. Yes, I want to see his future GPT come in to its own, and yes, he has pulled off some great deals to put the company into a better position, but the albatross of those accrued divs has to be handled. Once they are out of the way I think we will then see a more clear picture of the future. Common will not move out of the trading range as I see it until those issues are resolved. Must we wait until November? 2014? ...2016? Maybe we'll get a better feeling half hour from now.
Also took quick gander. Revenue is revenue, it's the earnings that I am not real happy about. And also still no divy news. I understand that the accountants work their magic to lower income, but quick question--or maybe I am missing something, but if you have a large loss, why the large provisions for taxes? Further, I have to look again to see if the ~$49m left is with or without making provisions for the perf divs. If without, that only leaves mid-teens millions to deploy which can be done in one deal . . . then what? Sigh.
Glad to see this board is still alive. A quiet summer overall, but after near 5 years waiting it would be nice to see the Perf caught up. Yes, new management has accomplished quite a turn around and gives good prospects for the future. Great job keeping us in the loop. A move in August would be nice, especially if the rest of the market goes on vacation. Concur. This is looking more and more like a "continue to hold long term" -- For us old guys, what a refreshing change! As to 20 . . . I am not holding my breath on that one--a little too optimistic I'd say but you would not catch me carping. Paying the accrued divy has got to be their next big step forward.
3.28% is not a bad rate! Longer term might have been nice, but at last it is additional capital that can be leveraged. Compare it to 8.25% for the Pref, even though the effective cost is nearer 6%, it still reflects the cost of money for the company is pretty good all things considered. I wonder if the Annual Meeting will have any more good news.
One thing I did notice on Page 38 of the revised Business Plan posted was that the Pref accrued Div's were listed under "Uses" through December, 2013 . . . which implies that those of us who have been patiently waiting for years may get paid. Good move on your $6.25 purchase. My purchases range from about $2.85 to about $14+. Now though I retain only half of the full position so the $2.85 is gone. Makes up for some of my $18 common. Nothing too wrong about putting some positive numbers on the books and doing some re-balancing. I will move completety into common when appropriate, but must juggle the tax situation. Management does seem to be delivering.
Earnings are out. CC this afternoon. Comments anyone? Also, where did the yahoo board go or is it up at all?
Heth, although I like your first numbers better (pesky thing, that math), I do think they will use some of that 100mm LOC or more efficently mortgage some properties. They seem to be acting conservatively, not a bad thing considering past history and uncertain markets, but I'd like to see some lower fixed mortgages linked with some inflation protection in leases for when (not "if", in my opinion) we do see the effects of Ben's helicopter. That should boost your numbers with their ROI and considering that the $13 MG&A should not go up that much with the added properties. They also seem to be doing a good job of prospecting for good "deals" as well as keeping expenses down. I think your 50 cent number is attainable. I also think that the driver for the stock price may be more influenced by the yield that eventually is assigned to the common. Another thought that was mentioned to me, they might call the preferred and then re-issue some at a lower coupon rate--say 6%--depending on market conditions? That could provide some added capital without diluting the common. Leveraging as they are, could be worthwhile. Thoughts on that possibility?
Gosh yes! The plan was intelligable and when added to the cc which just concluded I do come away with positive vibes for the company's future. DuGan does seem to deliver on what he says. If they do what they plan to, I can see the perf current by the end of the year, some div paying on the common (50 cents?) and, so long as they don't issue a boatload of new common, maybe an $8 price on the common. Nice to see you back too heth.
Okay, 10-K is out. Light at the end of the tunnel--I guess, but as a Perf-A holder, the loss carry forward and statement that with those losses they were not in danger of a REIT status problem in 2012 did not give me much immediate hope for a catch up on the div's. I still think that is a necessary step to reconstitute their reputation in the investment community, however with the latest moves that delay does not seem to have eliminated their ability to incease their capital. Perhaps that means more delay in payment. I'll be very interested to see what is said tomorrow on the call. Distilling that 10 was still quite a chore. I really look forward to a clean report without all the chaff. Common has done well, but I think we still have a way to go. The new leadership has delivered so far. But, disclosure, I have lightened up on the perf, taken some LT profits, prudence. Over four years seemed to be patience enough. I am still long common. Plan, good to see you're alive and well.
This is all really encouraging news especially for us who have held on for so long. The linked DeMuth interview on the earlier post was also nice to hear--let's just hope it is not pie in the sky. I have lightened up on my Pref A. taking some profits there as L T capital gains but still am optimistic that the new management team really does have a plan and they appear to be straight shooters. They are doing what they said and keeping the investors informed. What a great change from the prior regime! Disclosure: Still have a lot of Pref A as well as long common.
Bad day for the common price, but after listening to the CC, Dugan seems quite a bit more positive. After biting the CDO bullet and closing some deals it looks as if GKK may actually pay a div'y. Optimistically, maybe Pref'ds paid by spring? Absent a dollar crisis, common Divy by end of 2013? Comments anyone?
If it is in the '05 CDO, at least it may improve the value of the CDO? That can't hurt us--either way. The 27% return article--that wasn't too shabby. Thanks Plan--you are one heck of a knowledgeable researcher. BC
Term certain: Goldman made money on the deal. Exactly where this is in GKK's portfolio, not sure, but GKK's part of the deal was so small camparatively that I doubt it will have much effect either way unless I am missing something---like they are going to use any money they get to pay the perf div . . . okay, I could hope. Could be related to or buried in a CDO?
Renaud & Endless, you guys have any comments too on the recent call? Haven't heard much from you lately.
heth:
Just a "perhaps", but could they be looking to keep 2006 and sell the other two, assigning management of 2006 to someone else while retaining equity that would continue most of the cash flow and divest them from the overhead costs of maintaining that part of the asset base? I suppose Gordon does not want to tip his hand if there are negotiations about to happen or in progress, but it would seem there is some abiguity there. At least he is talking to us. Should work on his ahhs and a a's some as he speaks which drives me a little nuts sometimes. I know we hired him as a new corporate leader, not an orator. The US hired one of the latter and we sure got an amateur one of the former, but I digress. At least Gordon has some good experience. I do think the last caller was Jacobs from Motley Fool. Maher, 7% ... and I thought I was anxious! Let's see what Board Guru Plan has to say after he has gone through and nuanced the call. Thanks for your response. BC
heth:
I think that there were probably more questions waiting in the wings, but the call's 1 hour time period expired. The "NEW" GKK apparently does not want to deal with the CDO's regardless of their yield. A valid point about the balance sheets--I think Plan is one of the few folks who really understands and has the CDO issue under control. At least I have been relying on his words of wisdom and the others whom I perceive as adding constructively to this board. Cleaning the balance sheets up is a good thing. Had I asked a question, it would be to define short timeframe and medium timeframe which can mean many things to many people. Four plus years is a long time to wait for perf div's. I'd like to see some more definite guidance on when the goal might be set to pay perf & common shareholders some of the cash flow. "We are working toward that" is getting old. Divs are the reason most folks invest in a REIT. I still do not see how they can get really favorable terms for loan or equity issuance without paying their past and overdue obligations. I understand that the delay in paying allows more cash to be retained for investment and thus improves the company's long term circumstances and eventual cash flow, but is it or is it not a REIT? That brings up another thought, if the CDO's go, perchance at more than they are carried on the books, and the balance sheets are all recalculated, does that still leave us with loss carryforwards ad infinitum, or do they near the point where they must pay out divs or lose their REIT status? I can't wait forever and am thinking of letting some (25%) perf A go, take a capital gain. I'd still participate with the a part of the perf and the common retained. Comments welcomed.
My question is: How does this ownership in the LV property --with Goldman--work into the new GKK NNN business plan? Unless the GKK interest is going to be flipped at a profit after the purchase? How much of GKK's liquid funds will this tie up & for how long and, as has been questioned, to what advantage? Or is this just a good move to get the bean counters happier?
P.S. Good Labor Day Weekend to all.
Ahh Matt, you give me hope! I must admit, the PR release was a refreshing change from the prior administration's informational stonewalling. I was also surprised that the action came so quickly. If your forward projections are reasonible--and you usually have a good feel for distilling information as it becomes available, the $75-80 million would seem to indicate--whether income or revenues--that the common is very undervalued at this point. I'd think we could see between a double or a triple in pps even with a modest common dividend. If we project earnings at say $.60 to .75 per share, PE of 10, what do you think? Add my kudos to Plan's. Good job.
Come on guys - no comments on the latest news release? The properties might be familair, B of A. And this appears to start a beginning to a "sustained cash flow". Will put a big dent on the cash balance for sure. At least management will have something to talk about on their next cc. Any other thoughts?
Some price movement today on both the common and perf. For those who know the industry as well as GKK's position, any speculation--and I know it must be that--on what the cost of money might be to the company? I have seen some good companies taking full advantage of the low interest rates with new bond issues. I know GKK does not have the credit rating that they do, but just what would be a good guess on the cost of additional capital that they might be able to obtain to leverage up returns? I know there are a lot of varibles out there including the new business plan which is in process, but bottom line, could it be cheaper than the 8.125% of the perf? Or might new equity be the best way to go with a NNN business model? Any comments.
Heth agree with you pretty much, samething I have been thinking. Although TFL, I just don't know how much patience I can have on the perf--going on 4 years has been a long wait as it is. The potential tax law changes my complicate my decision making process. I was in this for the long haul, but then, it has already been a long haul for some of us. If we have to wait until the NOL is used up it will be many years before either perf or common gets any div. I agree that at least the Perf must be caught up before any realist debt instrument can be floated--perhaps even one with a lesser interest rate and a mandatory call of the Perf at par? Doubt that will happen unless the debt markets really give them a deal they can't refuse. Additional equity, I agree would be more likely successful without major delution if there was some kind of a dividend in place. A lot just depends on how large the new management wants to grow and how fast, plus that which we can't control-the general economy. Have a good weekend guys.
heth, per your 5:58 Yahoo post I think the 49<47 issue is to our advantage. Ok, I may be fixated on the Perf div'd, but then I'm owed 6 figures, so cut me some slack. Per your 4:25 Yahoo post, "recurring cash flow" means just what( ?) since I'd think they have that now to a certain extent with the income that they are getting--or did I miss something. I am not an accountant so I know that perhaps I am missing something in the numbers. How much [new] cash would they have to "invest" in order to generate ~$1.75M per quarter to even start to pay the perf Div? Seems to me we are talking about $87M invest yielding the 8% that has been discussed. That is about 44% of the $200M capital they currently have available. Leverage it up, but that still has a cost too. Do you see this happening within the 12-15 month time frame or less and do you think I am correct in assuming that the Perf div's will be paid prior to any significant capital contribution being made by any outside source? Thanks.
Re, good questions. I was reasonably satisfied with the Call, but still want to know how they can expect to "lever up" the cash that they have now via the investment community without the credibility of paying off the accrued Pref. I realize we are talking 15 quarters of accrued Divs on ~3.4 million shares, but how long will it be until they can find cash out of earnings to handle the now $27M due? Seems to me they have enough cash flow now to make at least some attempt to pay something. That meter is still running, albeit not compounding--wish it were! It also seems to me that 8.125% money (Perf. yield) is not the cheapest money out there now--or should not be if they had a credible reputation in the investment community. As to the REIT status, anyone have an idea which decade it will be when they have used up their negative numbers and must start to pay out some money or loose REIT status?
I can only hope that Gordon and new management will have something more positive to say and ACTION to report before Sept. 30--should it take that long and I develop enough patience. At least it does appear that the company is worth more than Mr. Market thinks it is--although, I am not buying more, have enough thank you. Plan, any further feelings on that subject?
Thanks Plan. Having looked at the releases but before reading your post I was about ready to say enough is enough and throw in the towel after near on four years. I'll listen to the conference call and see what else is said--if they would only bring Pref current! That would use cash, but where is their credibility if they don't?
Quiet Board. I have been a little out of the loop since a heart attack two weeks ago, but recovering. Lucky I took asprin when I did. Now if we can just see if the new regime can get GKK to recover. Pass the word, I don't need the stress! However, I'd love to be a fly on the wall at discussions re future strategic plans. I do hope we can see some hints prior to the August date to get PPS moving. I still really think that they will have to pay accrued Divs to get any type of additional funding. Plan have you come to any verdict on GKK's future? A lot of changes I would think. Have a good 4th guys.
heth, I've read through what has been released and was glad to see the new Pres put $2.5 million of his money in--skin in the game--not that he will not be well compensated. It seems also that they want to rebuild this company into a viable money maker. That could take a long time to grow to any appreciable size and I do think they will have to raise additional capital thus diluting the common. On the other side, unless they pay off the arrears in the Perf I think they will lack the necessary credibility in the investment community to do that. There indeed are a lot of losses to use up, but if you don't have credibility I don't care how good a new "plan" might be, I just don't think it will work. There may be some good opportunities coming so the sooner info is put out to current stakeholders as well as potential new ones, the better off we will all be. The meter is still running on the Perf div's and that will not go away. Yes, it will deplete the cash hoard some to get square, but knowing the burden is there, would you give them more money to play with? One broken promise could lead to another. In the past the management has been quite good with accounting machinations. Yes, I'd like to see future ROI, but I'd also like to see some current credibility built up. We are still only a $2-$3 stock. Remember $20? Further analysis or comments anyone?
Someone has to have a comment on this morning's release and subsequent stock action. What do you think guys? New hope? Are we in a multi-year rebuild? Worth giving the new team the benefit of the doubt? And about those accrued P-div's . . . ?
heth:
Profound apologies-although since I really don't know either of you, I can't say who should be pleased or who insulted? Kidding of course. I got just a little befuddled, memory lapse, senior moment. Sentiments remain. Seriously, the weekend is at an end so now: 24 business days until the 30th. But why do I have the idea that we still will not know much then? I concur with your logic about the downside protection gained by the unrestricted cash but I would like to see them either share it (pay the div's owed) or at least come up with a good strategic plan to productively employ it--or,be still my heart, do both. Meanwhile, as you said, opportunity loss. I wait. Cheers.
Okay, maybe fireworks for the 4th? It would be nice, however my confidence level is not very high on that. The leadership issue must be resolved at the end of June so they presumably would have to say something. The disarray in the markets, Europe, Iran, politics here and elsewhere--there just seem to be so many open or uncertain issues that major decisions are put on hold. Although no decision is a decision. In this type of market there should be opportunities for the brave. Your points are well taken. Matt, have a good Memorial Day. Markets are closed so we can relax!
Heth: I think you have to consider that these days every statement, filing, or PR thing issued by the company is carefully worded by lawyers to insure that the terms are couched with as many qualifiers and as much vague language as possible. If that were not the case, in this litigious society companies would spend all of their time in Court fighting angry investors. The 2005/6 tests are a concern, like just about everything else with this company. Management has pulled some rabbits out of their collective hats in the past and one would hope they can repeat that, but past performance as they say is no indication of the future. We are not privy to what is happening with management but I do think we will get some tea leaves to read on or about June 30th. That will be an opportunity to see what management has been doing and who will provide leadership in the future. This company has been extremely closed mouth about a number of things, including future plans and financial machinations as demonstrated by the tender for some of the preferred @ about $15 & can not be relied upon to look out for the interest of all owners or creditors. They have done some really interesting deals with the CDO's and admittedly the $15 preferred did benefit the company and long term holders of both common and the remaining "A". It did save a lot of bucks in dividends no longer due or accruing as well as a write down from the $25 call price. Candidly, I don't know if I really trust the BOD to look out for the shareholders or not. As I said, they have done some remarkable things, but it does seem that they have an attitude of "we are doing such a good job we should be paid first". Are they entitled? As to paying a div without using the NOL ... it depends on where they want to take the company in the future. 8.125% money is not cheap, unless you are leveraged and can earn a lot more.
Matt/Re--See, I do read these boards judiciously--I am glad to see there are at least three folks still alive and well on this board. It does get pretty quiet at times, although I guess with not much news to discuss that is logical. I certainly hope that your and Plan's optimism wins out. I just get antsy ever so often and I guess need a little positive reinforcement. Overall, the political events of the next six months could have a profound impact on the market, real estate, and thus GKK. I'll also through that out for speculative comments. I do hope that there is some GKK resolution prior to November so that I can be looking at a nice cash war chest ready to deploy whether that be in another REIT, a good world class stock strong enough to survive the fall of governments, or specie.
Thanks Plan. It appears that this situation could continue quite a while if they must use-up the NOL. The Perf stock price being above call seems at least to lead someone to believe that the div's will be paid--issue: is it to be in my lifetime! I don't see that the Pref A BOD member has had much influence so far, or at least nothing obvious. Absent a buy-out we appear to be stuck in neutral unless the company can formulate a new strategic plan AND communicate with shareholders. The RE market would probably have to improve significantly to entice another office REIT's interest and that does not seem on the near horizon. I am actually seeing increase residential building in my area (Howard Co.) between Baltimore and DC. Today I even saw a sign for several new homes starting in the 600's. Encouraging. Any other thoughts on Cozzi's contract renewal?
Guys: No answer or comments to my last post of a week ago. Does no one know or are you all too busy? I am getting to the point of lightening up without promise of something good happening. I've been waiting since 2009 and am really getting weary as well as wary. Thanks
A question to the GKK Gurus of this board (with hopes that the GKK BOD is listening): It seems as if on or about June 30th is the next day to watch as Mr. Cozzi's contract is up and I believe the PR said that buy-out attempts would ran until (. . . the cows come home? remember I am in the country) at least then. I know that the CDO issues are open, but I think they will not be allowed to fail. My question though relates to the REIT status. How long can the company put off paying a dividend if they are showing earnings? Must/can they "use up" accrued "losses" before they must pay out? It has also probably been answered before, but I am assuming that a perferred pay-out would fulfill the REIT payout requirement, yes or no? I am not an accountant and battle my way though reports--of which GKK's are particularly obtuse--but it seems to me they should have to do something regarding a pay-out soon. Of course at this point perhaps they do not care if they lose REIT status? Appreciate any comments/answers.
Oh, and Plan, yes Yahoo board has gotten more civil. I monitor both, but only comment here since this group seems more congenial, has more knowledge and generally is more worthwhile time wise.
I am reminded of two hungry carrion eating buzzards sitting in a tree. One turns to the other and says "Patience hell, I'm going to go kill something." I've had patience for four years-- starting buying common "for the dividend" in the high teens and then picking up bargin Perf at a good time. Averaged down. I know June will eventually come. I'd think we'd see something before that, or at least a cc. But guys, I could use some positive reinforcement here. Yes, I have some profit, but that Perf div would be nice and I'd really like to see either a deal to sell the company or do something more constructive with my equity than pay management large bonuses. When Oh Lord, when will we see the promised land (okay, sale or dividend in this case)?
Ahh, some news at last. Although it was not totally unexpected, at least GKK has got some non-CDO income. Assuming that this can cover their expenses, dare we hope for some movement on the Perf Div? I rather wonder how this will play with the common share price too. Perhaps if not an upward adjustment on some folks' estimated company value, at least a ratification which Mr. Market might acknowledge? That kind of an Easter present would be nice--assuming we have no call on the perferred--we could wish... Plan, you have any input, update or changed opinions?
Just a little chain rattle. Such a quiet board. Some strength recently, but does anyone see anything on the horizon or have any G2 (Intel for the non-military folks)? Are we all to just await March 16th?