Look... Ras is selling at $1.74... As so... It more than makes up for any dilution and share count that can possible be going forward. In the worst case scenario, there would be 200 million shares and a book value of over $4. You guys are talking like RAS is selling for over that... Wake up man...
Sure, earnings will be impacted by the extra shares, but even a miserable $0.20 in dividends a year would be over 10% return from current prices. Don't come and tell me that after all dilution RAS wont make 6 cents per quarter...
I do like RAS as a play for the future, with a portion of my long shot funds. I think that over the long haul this stock will be beneficial, much as they were before the Taberna fiasco. But, all of this divy talk in the near term should not be considered as a reality.
The dividend money will be coming from the cookie jar.
There is a rumore that Jimmy Mc Millan will be appointed as director of the compnsation commitee for RAS. The money saved on decreases in salary and option awards will be placed in a cookie jar and will be used for dividends.
You dont know who Jimmy Mc Millan is--look him up on Google and you will see who I am talking about.
I'd say they should nix the preferred dividends for now...and think they should also do what DDR did 2 years ago...and find a "partner" with some deep pockets...and basically give some controlling interest to "this new partner"...assuming they can find one & assuming they can swallow their pride......they'd have to cut a sweet deal for that, but when you have to...you have to.
ps...I'd not be buying the preferreds
Where is the money supposed to come from to pay your "miserable $0.20 in dividends a year", when they have $7.9 million of recourse debt coming due in the next 12 months and only 6 quarters left to come up with $146 million to redeem the convertible bonds in April of 2012?
The bond debt alone accounts for $1.50 per share, or .25 per quarter over the next 6 quarters: Q4 2010, 4 quarters in 2011, and Q1 of 2012. That's gonna take .25 per quarter of free cash, since cash is the only way to redeem the bond puts. Oh, yeah, let's not forget the $1.975 million per quarter needed over the next 12 months to cover the $7.9 million in recourse debt coming due even *BEFORE* the bonds are put. Better add in another .02 per share, bring it up to .27 per quarter needed just to stave off the creditors. And they are making .06 per quarter? Shortfall of .21 per share per quarter before paying a red cent in common divs. Where, exactly, I ask again, is the money supposed to come from to pay your miserable dividend?
Taxable earnings are no longer negative. Occupancy is growing. New loans are being written. Buildings are being marketed. All of that should generate higher earnings, especially taxable earnings. Its not difficult to see the 9 cents a quarter in earnings that would deliver 5 cents a quarter to common shareholders in the not so distant future. Taxable earnings were eight cents last quarter, and if provisions for losses hadn't increased, they would have been about that much this quarter.
Let me put it differently, if provisions for losses goes to zero and everything else stays constant, the dividend that would follow soon thereafter would be closer to 9 cents a quarter, and all indications are that things are improving.
<they have $7.9 million of recourse debt coming due in the next 12 months and only 6 quarters left to come up with $146 million to redeem the convertible bonds in April of 2012?
The bond debt alone accounts for $1.50 per share, or .25 per quarter over the next 6 quarters: Q4 2010, 4 quarters in 2011, and Q1 of 2012. That's gonna take .25 per quarter of free cash, since cash is the only way to redeem the bond puts. Oh, yeah, let's not forget the $1.975 million per quarter needed over the next 12 months to cover the $7.9 million in recourse debt coming due even *BEFORE* the bonds are put.>
Exactly. Anybody expecting any type of divvy from RAS before the convertibles are put in 2010 is hallucinating IMO. To keep the franchise and new income producing properties intact, I see the only way to meet the 2010 obligation is to dilute the hell out of the stock.
Well, for 9 months they have only made 9 cents, that is 3 cents per quarter average. Taxable earnings is what counts, not earnings from conversions, which are treated as extraordinary earnings by the Street. Q.1 was -2 cents. Q.2 was +8 cents. Q.3 was 3 cents. That was one of the main reasons for the sell-off, as mostly everyone was expecting taxable income of 9-10 cents plus for Q.3.
Yes, but nine cents is a huge improvement on losing money, which they were doing last year.
The business has transitioned into a real estate ownership phase. Ownership is generally more cost intensive than making loans (which reduces margins) but less risky than make loans (which is why PREITs generally have lower yields (much lower yields) than MREITs). The transition into property management isn't over. Occupancy rates are still rising and margins will rise as they do. On the other hand, this quarter is the first in a while that shows the beginnings of a transition back into more of a loan making model, with loans getting paid off and new loans being written.
I know you understand these transitions, yankee. You've seen them before. You also understand that the market overvalues stability and undervalues transition, which is one of the reasons RAS is at a lower price now.
Mario is right though, even given that there is no dividend, this stock is well below the price it should be at right now under even marginally efficient market pricing.
The sky isn't falling, but you'd never know it for all the chicken littles running around this board.
EXACTLY Yankee. I guess since you say it more diplomatically than me it is ok and Davis will have to agree. That earnings generated is a de minimus return on equity. If you have a stock at 1/2 book delivering a 1% ROE, you know what THAT IS EXPENSIVE. Get it guys? That means you expect a 2% return in the secondary market without any multiple expansion. I'm sorry if this math is too hard for you dudes (not you yankee). This is why I keep saying RAS-option. The reason to buy RAS is you think that the platform will generate much higher normalized returns than 2010. I'm not sure why they will.