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December 31, 2008

Comments

jb

Richie,

Thanks for the additional thoughts. Just let us know when you think the mayonnaise has spoiled...

Just as an FYI, I have taken a food safety course and usually the mayo is not the problem, but instead the main ingredient like the potato that causes food poisoning...

Richie

JB,
Good points but I think like a lot of these companies in "REIT Land", EDR has the same issues with debt and cash levels. What I have been watching is some of these companies go out of business and this has to do with either credit lines fading or some other sort of financing problem. I think the guys at EDR would be dead by now if they werent able to keep chugging along. I also have a funny feeling, REITS like this one (if they are able) are going to see their debt service numbers drop precipitously with the level of interest rates now. I hate chasing yields too but if youve noticed these guys have been able to maintain this 20.5 cents a quarter level all the while the stock has dropped over 60%. I'm not saying the dividend wont go lower but the beauty of these REITS has always been their requirement to pay out 85% of their profits to get favorable tax treatment. Like I said too, I love the demographic angle with college populations only going higher. But please do keep in mind this pick of mine is being driven by technical charts as well. So if it doesnt perform in the short term it'll be discarded like a bad jar of mayonnaise in the sunshine. Thanks for the comments. Please keep em coming.

jb

So, here is my question... With their debt levels and lack of cash do you have any concerns that they are in the same screwed position that many other REITs are in now?

I know universities and students needing housing is a relatively stable, but still it seems to me to be a bit of gamble. Any thoughts would be great. Also, I always come back with don't chase yield axiom, but curious your thoughts and validation for why this is good pick right now...

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