# SRQ Scott's reit



## realestateinvesting (Apr 3, 2012)

I have been watching this REIT for almost 3 months now, It's down almost 8 percent for the day, any thoughts? Would this be a good time to get in? 

Thanks


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## Spudd (Oct 11, 2011)

The reason it's down is because they cut their distribution.


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## Young&Ambitious (Aug 11, 2010)

With the share price down one can get a 9.5% yield based on the 80% payout ratio. Interesting...


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## HaroldCrump (Jun 10, 2009)

This has been a troubled company for several years now.
Back in spring 2011, they lost one of their largest customers (the Pizza Hut chain) and since then, they have gone steadily downhill.
Don't look at the yield.
You have to look at their payout ratios as a % of AFFO, the type of customers they have, and what the future business growth of their customers is likely to be.


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## Young&Ambitious (Aug 11, 2010)

I took a look through their financials; they intentionally have a high payout. This is an income stock 100%, not a growth stock. The management team looks good. The Pizza Hut could be a blip, not a company breaker. Just my thoughts...


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## HaroldCrump (Jun 10, 2009)

Technically all REITs and ex-income trusts are supposed to be income stocks.
But the income does no good if the stock price is dropping by an equal or more % year over year.
Have you wondered why this stock has suffered so much at a time when pretty much every other REIT is making 52-week highs every month.
The Pizza Hut deal may not be a company breaker in the long run, but it is certainly more than a mere blip.

Buy the stock by all means if you believe in it strongly, but don't kid yourself.
It could be an acquisition target by a larger REIT, so that's another angle.

All I am saying is go in with both eyes open, and don't kid yourself about it being an "income stock", or that its troubles are only a blip.


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## Cal (Jun 17, 2009)

All of the warnings signs are flashing....distribution cut, falling share price, high yield, loss of market share.....


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## Mall Guy (Sep 14, 2011)

Their main tenant was Priszm Brands, largest operator of KFC (as well as a few Pizza Hut/Taco Bell) in Canada. Scott's REIT and Priszm Brands are a product of income trust sponsor John Bitove trying to exit his Scott's Restaurants Inc purchase 10 or 12 years ago. He split the business in two, the Priszm Income Fund . . . they took on the operation of the restaurants (and are now in receivership) . . . and Scott's REIT (which took ownership of the underlying real estate of the KFC location). I believe at the Scott's and Priszm IPOs Bitove wanted to get his ownership down to 30% and I could be wrong, but I don't think he made it to that level. 

Scott's also has external management, and Bitove just raised the fee his other company charges the REIT. I also think there is some significant liability due to the Priszm collapse, it has to put pressure on management, and in my opinion, little alignment with unit holders. 

They have been trying to change the story lately, buying some Shopper Drug Marts, and other "small box" retail (their words).

Having said all that I road Scott's from $3.40 to $7.00 (+/-) a few years ago . . . would not enter at this point. It's a small market cap, not sure any of the quality REIT want it as a take-over . . . just my opinion . . . there is a reason for the high yield.


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