| Over a month ago | ||||
Prospect Capital… Prospect Capital Corporation announced that Prospect has purchased $25M of first lien senior secured floating rate notes issued to support the recapitalization of KM2 Solutions, led by affiliates of H.I.G. Capital. | ||||
National Property REIT… National Property REIT Corp. announced the recent acquisitions of five separately financed multifamily properties for an aggregate asset purchase price of $250.4M. These acquisitions add 1,856 units to NPRC's diversified multifamily portfolio, which now includes 44 separately financed properties totaling 17,946 units across 14 different states, primarily in Southeast and Midwest markets. NPRC's multifamily portfolio has a total current market asset value in excess of $2.5B. These acquisitions continue NPRC's core strategy of investing in suburban workforce housing with value-add potential, a sector that, based on rent growth and occupancy, has outperformed large central city housing, office, retail, and multiple other real estate segments during the past year. NPRC's recent property acquisitions are geographically diverse, with locations in Atlanta, Birmingham, Charleston, and Dallas, all Sunbelt cities exhibiting favorable employment growth and multifamily supply-demand dynamics. | ||||
Prospect Capital… Prospect Capital Corporation announced that Prospect has purchased $29M of first lien senior secured floating rate notes issued to support the recapitalization of Thermal Product Solutions, a portfolio company of Resilience Capital Partners. Founded in 1998 and headquartered in East Troy, Wisconsin, Thermal Product Solutions designs and manufactures industrial and laboratory ovens and furnaces, as well as environmental temperature cycling and stability test chambers. Product brands include Wisconsin Oven, Tenney, Blue M, Gruenberg, Lindberg, MPH, and Baker. TPS is a market leading provider with an extensive offering across end markets, applications, and temperature/environmental settings, serving top Fortune 500 businesses since the earliest predecessor company to TPS was founded over a century ago in 1912. | ||||
Reports net asset value… Reports net asset value per share $8.40 vs. $8.18 in June. | ||||
| Over a quarter ago | ||||
"Since October 2017,… "Since October 2017, our NII per share has aggregated $2.19 while our shareholder distributions per share have aggregated $1.98, resulting in our NII exceeding distributions during this period by 21c per share. Initiatives focused on enhancing accretive NII per share growth include our recently announced $1B targeted perpetual preferred equity program, a greater utilization of our cost efficient revolving credit facility (with an incremental cost of approximately 1.4% at today's one month Libor, and increased originations in senior secured debt and selected equity investments to deliver targeted risk-adjusted yields and total returns as we deploy available capital from our current underleveraged balance sheet," said the company in a statement. | ||||
Wells Fargo analyst… Wells Fargo analyst Finian O'Shea initiated coverage of Prospect Capital with an Underweight rating. While the stock appears in-line to cheap on a price/NAV basis, it has historically been cheaper, and it remains one of the most expensive names under his coverage. The analyst believes a near-term dividend cut will serve to re-rate shares given heavy retail ownership in the stock and bring valuation closer to in line on an earnings basis. | |
Latest data shows the… Latest data shows the largest indicative borrow rate increases among liquid option names include: Tailored Brands (TLRD) 54.88% +1.58, Prospect Capital (PSEC) 12.33% +0.66, Aurora Cannabis (ACB) 132.81% +0.57, US Global Jets ETF (JETS) 11.17% +0.54, Denbury Resources (DNR) 14.86% +0.28, Kirkland Lake Gold (KL) 0.48% +0.16, Harmony Gold (HMY) 0.50% +0.09, ProShares UltraPro Short Russell 2000 (SRTY) 4.50% +0.08, Manulife Financial (MFC) 0.38% +0.07, and Party City (PRTY) 19.50% +0.06. | |
In a letter to… In a letter to shareholders, Prospect Capital CEO John Barry said, "Starting two years ago, we began reducing debt at Prospect Capital Corporatio. We were the only large traded BDC not to quickly elect a lower minimum asset coverage, which would have enabled us to add leverage and grow assets, but only by taking on more risk. When the virus hit, we carried less leverage than almost any other large seasoned BDC. Because of our decision to de-risk, the virus caused our NAV per share to decline 7.9% versus a 13.7% median traded BDC NAV per share decline. Prospect continues to hold investment grade ratings from Standard & Poor's, Moody's, Kroll, and Egan Jones. Only one other BDC has four investment grade ratings. De-risking Prospect protected our NII and distribution. For the 3/31/20 quarter, we earned $68.5 million of NII and paid $66.2 million in distributions. Today, we are declaring distributions for the next four months at the same rate as the past 32 months. While I believe asset values and our NAV should reflate from the 3/23/20 low in the S&P 500, which as of May 8, 2020 is up 31% (and the VIX down 51%), we are staying true to the strategy that has served us well since 1988, managing portfolio risk to protect capital entrusted to us and generate shareholder earnings...As Prospect's largest shareholder, I want to increase our NAV, NII, and share price. I believe we now have tools in place to achieve that goal. Should investors see a steadily increasing NAV and NII, we may see our stock price respond." | |
The company's net… The company's net asset value per share decreased by 68c to $7.98, a decrease of 7.9%, during the March quarter. "This decrease is approximately 40% less than what the average listed BDC has reported to date for the same quarter," Prospect Capital said in last night's earnings release. It added, "PCM has weathered multiple market challenges over the last several decades, including stock market crashes, credit market dislocations, liquidity crunches, epidemics, and pandemics, thereby providing valuable experience and perspective to help guide Prospect through current macroeconomic challenges. During the prior economic downturn from 2007 to 2010, Prospect benefited by "going on offense" with the first acquisition in the history of the BDC industry at an approximately 50% discount to net asset value. Prospect is actively reviewing other potential investment opportunities emerging in the current environment. Prospect is also seeking shareholder approval for the one year option to sell shares of our common stock at a price below net asset value. The purchase of Patriot might not have been possible without Prospect having previously received such approval from Prospect shareholders." | |
Raymond James analyst… Raymond James analyst Robert Dodd downgraded Prospect Capital to Underperform from Market Perform after the company announced changes to its dividend policy, including that unless shareholders specifically notify the Plan Administrator, all dividends will be payable in shares of stock. Dodd says this announcement, coupled with its election to temporarily modify its asset coverage ratio calculation, leaves him materially concerned with the state of Prospect's portfolio and liquidity position. |