After spending the summer and fall months trading at 50 to 70 cents a share, Capital Senior Living‘s shares zoomed up last week.
If anyone was watching the stock market last week, you had to notice that Capital Senior Living’s shares just zoomed. Since November 20, the price has almost doubled to $1.38, and last week alone they were up about 50%.
Now, we do need some perspective, since the starting point was just 73 cents a share, so any movement results in an exaggerated percentage increase. Still, an increase is an increase. But why?
I am sure there were some mutterings about someone buying the company. But if you do the math, it just doesn’t work. Using third quarter occupancy and average rents, and assuming a 6.5% cap rate, we get a value very close to the debt that will be outstanding once they transition 18 communities to Fannie Mae. This, however, is before about $6 million of projected annual capex.
Perhaps investors got wind of the announcement yesterday, that Capital was beginning the transition of those 18 properties to Fannie Mae. Really? Old news. I just don’t know what all those institutional investors, many in at more than $10 per share, are going to do. Even for those that came in at single digits, the numbers just don’t work. Maybe a merger with Brookdale Senior Living will solve the problem, and let the share value ride with Brookdale? I’m just sayin’.