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iStar Financial Inc. Message Board

  • ag55gen ag55gen May 30, 2009 11:33 PM Flag

    Managment Decisions: SFI & NRF

    NRF has just announced an at-the-money secondary offering of 10 Million shares. This changes my opinion of NRF. Is the low $3s really the right price at which to sell stock?

    This doesn't change my opinion of SFI's historical management, rather, it compresses my view of the two.

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    • I don't know anything about NRF but based on your comments I would be very suspect about it's "advertised" book value. Have they understated reserves?
      On the other hand iStar's massive retirement of common shares are a statement that they think the share price is well below book value.

      • 1 Reply to windsurf32937
      • SFI's retirement of common shares at low prices is very impressive.

        With NRF, it is mostly a matter of whether their borrowers keep making the monthly loan payments. So far, NRF's pool of borrowers is outperforming the CMBS pool and every other lender's book or pool of which I have been made aware. Will this continue? I hope so, and have some reason to believe it will given the seasoning, personal guarantees, extra collateral, etc. . . . but don't really know.

        No one can rely on the GAAP BV for NRF or most other mREITs. The GAAP rules make the GAAP financial statements misleading.

        Based on the latest available public information, NRF was sitting on a large cash hoard and was fully in control of its future. Based on the latest information, NRF appears to be a much more conservative investment than SFI, but SFI is much more likely to go up 5-10 fold from here, while NRF is more likely to go up only 3-5 fold. Of course, the latest information is now several months stale, so things could have changed quite a bit.

        NRF's continuation of a cash dividend is a sign of confidence that SFI abandoned many months ago.

        The more time that passes, the more impressed I become with Sugarman.

    • Ag,

      SFI has recently bought back common shares at 5% to 15% of book value. On the other hand, NRF is proposing to sell new shares of NSF common when current share price is 15% of book value.

      That tells me all I want to know about NSF vs SFI. SFI is looking after common shareholders (including themselves who hold substantial common shares) while NSF is screwing common shareholders.


      • 2 Replies to value_man_98
      • Sam,

        Yes - those are the facts on which I comment and that is my point.

        NRF's economic book value is about $8, yet it is proposing to dilute the existing shareholders by about 15% by selling 10 Million new shares at about $3.30/share. They only raise $33 Million with this transaction (less than $32 Million after paying commissions). Why bother? I suppose they could buy some more debt back at 40 cents on the dollar . . . but does the math really work when you dilute your shares by 15%? Maybe someone else has a better idea?

        SFI, OTHOH, in the face of looming maturities, in the face of possible insolvency, has bought back a huge percentage of its common.

        It seems that NRF is being overly conserviative.

      • Yes, SFI has been one of the few companies to serve the shareholder with the buybacks. It makes it easier to establish a meaningful dividend someday.

    • Would you care to explain what you just said?