The 10K came out this afternoon. One interesting tidbit in the filing relates to iStar's interest in LNR, of which iStar owns a 24% interest.
That ownership interest was carried on the books at the end of 2010 at $122MM. In 2011 the investment provided an equity interest return for iStar of $53,851 (over 40% on carrying value). iStar received about $17MM of that in cash (the rest retained in LNR's capital account) and now carries its investment at year end 2011 at just under $160MM.
From a troubled loan and complex recap comes an equity interest that appears to be performing quite nicely with quite handsome returns.
If that's an insight into the potential of REHI it's a nice one.
Agreed. And it seems to be getting better every quarter. The most recent quarter's equity in earnings contribution is $17,279 which is a 38% increase over the previous quarter. Not sure where it will stabilize, but at current run rate at a 10 multiple, would value SFI's interest at north of $500 mil. LNR is nation's largest servicer and it appears that special servicing volumes will continue to grow with the first wave of 5 year loans originated at market peak in 2007 maturing (see links). So I think the best is still to come for LNR.
How are you valuing SFI's interest at $500 mm? Isn't' the math $17.2 mm * 4 = $68.8 mm * 10x (multiple) = $688 mm and SFI own's a 25% interest in the equity so their equity value would be $172 m? How do you get to >$500 mm?