iStar got through the tumultuous 4th quarter with a breakeven result and greater than projected liquidity.
NPLs are what they are, I'm happy to have iStar managing them with expertise and equanimity. Wherever they go the debt will correspondingly follow thus the constructive hedge.
That the bank consortium has anted up a new $700MM to $1Billion in financing is amazing and a testament to iStar's foresight in their business structure.
If the debt deal closes in March as expected I would anticipate that iStar would want to make hay while the sun shines, i.e. gobble up cheap debt and perhaps pick up a few more shares.
At some point the new NPLs will stop but the debt buys will continue - that could be sometime this year and that will lead to significant earnings possibilities with a reduced share divisor.
There is a earnings drag from a large slug of non earning assets in the NPLs and REO, but I do feel that this report greatly reduces the uncertainly surrounding iStar's survival and greatly increases the possibility of iStar's prosperity.
There are many reasons for investors to sit on the sidelines that it's hard to prophesy the correlation between improving business prospects and the share price, but I'm happy.
I do think the odds of upside earnings surprises as early as Q1 have increased.
I'm surprised not more is being said about the TNW reduction being negotiated in the facility restructure. A lot has been said about how precarious SFI is sitting when it comes to violating current TNW ratios. The talked about reduced TNW test will allow tremendous greater flexibility to consider every avenue open for repurchases of debt/equity, etc., won't it?