There was a strategic review by management for potentially selling the company, but nothing came of that. There was some turnover with the CEO. The big issue is when it initially came to the market, it had very significant exposure to Magna (MG-T), which was their largest tenant. However, it had a pristine balance sheet. When you think of the Debt to Growth Book Value, it had approximately 25%, and the theory was that if they increased the leverage and took that Debt to Growth Book Value to 40%, they would have $1 billion to play with, diversify tenant exposure, make acquisitions. However they haven’t done any of that. That is unfortunate, because real estate prices have gone up significantly. It pays a decent dividend of 5%. His concern is that you really do need the leadership in there.

Return of capital reduces your cost base.  There is potentially an opportunity for them to utilize an under levered balance sheet.  They have a lot of exposure to MG-T as a tenant.  There was some turnover in management. 

One of the more frustrating stories in that it has gone through management changes and now has a new CEO. 80% of its buildings are Magna (MG-T) with a third being special-purpose large car factories globally, so it has to deal with a very complex leasing structure. However, it also has the best balance sheet. Management, which is as yet unproven, will have to walk this minefield. He just wants to see how the new management handles the leases that are coming up in the next 2 years, and also if they are willing to use their balance sheet to acquire more real estate at a more aggressive pace.

When this IPO’d, it was primarily dependent on Magna (MG-T) accounting for well over 90% of its net operating income. Management’s objective was to reduce Magna’s exposure to less than 50% NOI within 3 years by making additional acquisitions by using their under leveraged balance sheet. Management has not done that in a very aggressive way, so debt to growth BV, it is still very under leveraged, less than 30%. They have a lot of balance sheet capacity to facilitate additional acquisitions. They haven’t done anything, which is unfortunate because in the interim the value of industrial properties has gone up and interest rates have fallen. They missed out, which is why you are seeing the stock languish. They did undertake a strategic review. The CEO left, so there is new management. Feels the dividend is sustainable.

It announced a strategic review as MG-T is 80% of their tenant base.  Everyone is waiting.  There is so much potential because the balance sheet is so much under levered.  He trimmed when the CEO left.  You get paid 6% to wait.

Closely tied with MG-T.  80% of revenues come from those properties.  They have been trying to bring this down.  The dividend is good and in fact it is probably the best performing REIT there is.