Dallas, Texas 10/11/2013 (Financialstrend) – The shares of real estate investment trust Newcastle Investment Corp. (NYSE:NCT) shares were trading at $5.72 per share as of close of business on October 10. The stock has gained close to 3% during trading that day. In spite of the healthy rise in value of the stock, the transaction volume was relatively low. Close to 2.5 million shares of the stock changed hands in comparison to 3.8 million average trading volumes per day. Over the past month, since the time news of Newcastle Investment strong backing of its struggling subsidiary GateHouse became public knowledge, the stock has appreciated by close to 2.5%.
Investors are enthused by the fact that the loss making GateHouse is being hived off as a subsidiary of a standalone firm “Local Media Group” holdings thus reducing the parent company’s direct exposure to the long accumulated debt of close to $1 billion of GateHouse. Readers will recall that GateHouse had filled for voluntary bankruptcy under chapter 11 in a US law court. It had submitted a revival plan for which NCT had come forward as the main sponsor.
The diversified REIT has a market cap of $1.48 billion. It generated close to $387 million of net income from sales of $328 million over the past 12 months. Like other REIT focused companies, New Castle Investment too had tapered down its dividend payout plans over the past quarter. Current forward yield is 6.99% when seen in context of the $0.4 dividend paid out over the past quarter. This can be construed as a direct result of Fed’s September 18 “No taper for now” decision. This move forced the REIT firms to cut down dividend payout plans to tide over the macroeconomic situation where REIT’s fear the interest rates will not raise substantially over the next few quarters.