Earnings and market action

Earnings season continued with STAG, CUBE and CTT reporting.  We found STAG’s report quite strong as it proved their business model.  Re-leasing and renewal efforts were each accretive, demonstrating that the shorter lease terms STAG uses are in fact mispriced and opportunistic.  Growth is harder to find these days and STAG remains an inexpensive source.  CUBE’s report was just as strong, but the market lost its mind, trading CUBE up over 4% for most of the day.  While we liked the diversification CUBE brought to the portfolio, I am not averse to taking the profits so we sold CUBE on the strong pricing.

CatchMark’s reports was more of a mixed bag.  Revenues came in strong on heavy harvest volumes, but price realizations remained weak.  CTT traded down as much as 4.5% on the day then rebounded at close to only about 1.3% down.  I think the market was disappointed in the EBITDA and perhaps thinks CTT is overcutting.  However, high harvest volumes are part of CTT’s acquisition criteria so the amount of cutting per acre is actually sustainable.  I was substantially less disappointed in the report than the market as there were some good notes that got overlooked.  CTT maintains a superior distribution network which yet again afforded superior pricing on pulp than regional prices.  We will keep a close eye on CTT, but we are hanging on for now.  The yield is fully covered by CAD and the land value is strong.

Commentary may contain forward looking statements which are by definition uncertain.  We retain no obligation to update or correct forward looking statements should the available information change.  Actual results may differ materially from our forecasts or estimations.

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2/16/17 2CHYP Performance since inception

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