We explained our cap rate based NAV in a previous article and concluded that Omega Healthcare (OHI) was grossly overvalued based on NAV. We are grateful to Beyond Saving for helping clarify that a 12.5% cap rate based on straight line revenue, adjusted for non-income producing properties, comes to a $21 NAV. This is very close to the consensus number of $23.44. For the purposes of our exercise below though, we really don't care much about the value of the properties, just the cash flow of the rents.
A dividend in jeopardy
All finance is an exercise in anticipating what will happen. So it follows that we believe the following events will take place, whether in an exact or similar fashion, in a relatively rapid (9-15 months) time frame. We will present why we think these events will happen and why we could be wrong. That will give our audience a chance to decide on whether they think a dividend cut will ultimately happen or not.
READ FULL ARTICLE HERE
