Net Lease Office Properties (NYSE: NLOP)

Sector: Real Estate Industry: REIT - Office CIK: 0001952976
Market Cap 296.47 Mn
P/B 0.69
P/E -1.64
P/S 2.56
ROIC (Qtr) -24.77
Div Yield % 25.50
Rev 1y % (Qtr) -5.39
Total Debt (Qtr) 47.12 Mn
Debt/Equity (Qtr) 0.11
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About

Net Lease Office Properties (NLOP) is a real estate investment trust (REIT) that specializes in owning and operating office properties. Operating in the real estate industry, NLOP is subject to a high level of competition, regulatory complexity, and sensitivity to economic conditions. The company's main business activities involve owning and operating a diversified portfolio of office properties, which are leased to a wide range of tenants. These tenants include corporate entities, government agencies, and non-profit organizations, with no single...

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Investment thesis

Bull case

  • Strong operating cash flow of 52.64M provides robust 1.12x coverage of total debt 47.12M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 522.55M provides 11.09x coverage of total debt 47.12M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 52.64M provides exceptional 619.27x coverage of minority interest expenses 85000, showing strong core operations.
  • Operating cash flow of 52.64M provides strong 2105.52x coverage of stock compensation 25000, indicating sustainable incentive practices.
  • Strong operating cash flow of 52.64M provides 7.01x coverage of SG&A expenses 7.51M, showing efficient operational cost management.

Bear case

  • Operating cash flow of 52.64M barely covers its investment activities of 105.25M, with a coverage ratio of 0.50, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 52.64M provides thin coverage of dividend payments of (45.92M) with a -1.15 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 157.90M provides weak coverage of capital expenditures of (105.26M), with a -1.50 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of 52.64M provides minimal -17.38x coverage of tax expenses of (3.03M), suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating earnings of (164.60M) show weak coverage of depreciation charges of 45.87M, with a -3.59 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the REIT - Office
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BXP BXP, Inc. 9.52 Bn 10.44 3.12 17.35 Bn
2 ARE Alexandria Real Estate Equities, Inc. 9.27 Bn -6.45 3.06 12.40 Bn
3 VNO Vornado Realty Trust 5.56 Bn 6.60 3.07 7.89 Bn
4 KRC Kilroy Realty Corp 3.77 Bn 13.65 3.39 4.59 Bn
5 CDP Copt Defense Properties 3.33 Bn 46.00 5.75 2.49 Bn
6 SLG Sl Green Realty Corp 2.75 Bn -24.56 2.74 5.97 Bn
7 HIW Highwoods Properties, Inc. 2.49 Bn 15.83 3.09 3.55 Bn
8 CUZ Cousins Properties Inc 2.44 Bn 24.76 4.97 3.34 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.68 0.66
EV to Cash from Ops. EV/CFO 6.79 35.35
EV to Debt EV to Debt 7.59 1.60
EV to EBIT EV/EBIT -2.17 -177.85
EV to EBITDA EV/EBITDA -3.99 15.22
EV to Free Cash Flow [EV/FCF] EV/FCF 2.26 -21.54
EV to Market Cap EV to Market Cap 1.21 14.69
EV to Revenue EV/Rev 3.08 6.06
Price to Book Value [P/B] P/B 0.69 0.76
Price to Earnings [P/E] P/E -1.64 3.15
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -3.94 -2.81
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 86.83
Dividend per Basic Share Div per Share (Qtr) 0.00 1.13
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -31.14
Interest Coverage Int. cover (Qtr) -8.47 -0.15
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -63.33 -13.82
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -51.88 8.92
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -13.06
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -36.21 -81.02
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -134.67 -59.28
EBIT Growth (1y) % EBIT 1y % (Qtr) -39.18 -85.68
EBT Growth (1y) % EBT 1y % (Qtr) 6.49 -24.55
EPS Growth (1y) % EPS 1y % (Qtr) 9.42 393.08
FCF Growth (1y) % FCF 1y % (Qtr) -55.58 148.67
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -33.82 -2.47
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.22 0.13
Cash Payout Ratio Cash Payout (Qtr) -0.87 0.24
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 0.11 1.46
Interest Cover Ratio Int Coverage (Qtr) -8.47 -0.15
Times Interest Earned Times Interest Earned (Qtr) -8.47 -0.15
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -102.40 29.81
EBIT Margin % EBIT Margin % (Qtr) -142.02 -4.47
EBT Margin % EBT Margin % (Qtr) -158.78 -25.12
Gross Margin % Gross Margin % (Qtr) 70.70 60.66
Net Profit Margin % Net Margin % (Qtr) -156.20 -26.43