Commonwealth (CWH): Meet Luxor Capital’s Newest REIT

Page 1 of 2

Commonwealth REIT (NYSE:CWH) is the newest addition to Luxor Capital’s portfolio following a 13G filing with the SEC last week. Luxor has taken a new position in the office and industrial focused REIT that accounts for over 5% of Commonwealth’s outstanding shares. Managed by Christian Leone, Luxor was founded in 2002 and remains employee-owned. Luxor utilizes a public equity and fixed income hybrid strategy, while primarily investing in special situations and distressed companies. Luxor joins billionaire Ken Griffin – founder of Citadel Investment Group – as one of the top Commonwealth fund owners (check out Ken Griffin’s new stock picks).

Christian Leone

Commonwealth pays a 6.4% dividend yield and focuses on office properties (317 locations) and industrial (199 locations). Office REITs are expected to continue to lag the overall economy, but should perform well assuming employment levels begin to see a boost. It appears overall office vacancy rates are showing some stabilization at 16.5%, thanks in part to the decline in new office space. Commonwealth’s 3Q earnings results showed funds from operations below the same quarter last year at $0.81, compared to $0.93 for 3Q 2011; the stock is down 10% over the last six months. Commonwealth presents investors with solid value after seeing weakness of late and it continues to reallocate capital to better-yielding properties. The REIT has sold off various suburban properties to raise capital for key office building acquisitions.

Luxor has a fascination with REITs and investment firms, and holds large positions in American Capital Ltd. (NASDAQ:ACAS) and American Realty Capital Trust Inc (NASDAQ:ARCT). American Capital is Luxor’s 5th largest holding, good for about 6.4% of the company, and American Realty was a new position taken during the third quarter, sitting at the 10 spot in Luxor’s 13F portfolio. American Capital is an equity firm and global asset manager investing in private equity and real estate. The investment company also trades very cheap when compared to other major peers, at 2.5x earnings. Other major firms all trade well north of that, such as KKR (7x), Apollo (19x), and BlackRock (15x). On a P/B basis, American Capital trades at only 0.7x and a book value of $17, compared to its current share price around $12. Billionaire John Paulson is one of American Capital’s fellow investors (see Paulson’s newest picks here).

American Realty is a commercial property REIT that pays a 6% dividend yield. Trading at a book value of $6.70, American Realty is a bit on the rich side given its $11+ share price. This monthly dividend payer is also looking to continue growing its portfolio, with a recent acquisition of five properties spread across four states. American Realty’s premium valuation is a result of its industry-best 100% occupancy rate. The REIT is also in the process of negotiating a merger with REIT Realty Income, which would give the two REITs a combined market cap of over $7 billion, while adding 500 properties to Realty Income’s portfolio.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!