Both are creating a publicly traded REIT for their multi family property portfolios. NCT is just breaking into two, while RAS is doing an IPO of IRT.
I think taking IRT public will both raise cash for RAS to redeploy, and will also pull out value that is currently hidden within RAS. I think IRT can trade at a high multiple to cash flow/dividends because of the perceived predictability and stability of these cash flows.
Well, in some ways you are right, in others though it's completely different. IRT was clearly a failed attempt at the con market that are Non-Publically-Traded REITs. It's a shame. I never once liked the idea of RAS trying to do this. It didn't work. So now what? Well, we just make it go public. This will help in that people like things being very liquid. As a Non-Traded REIT, that isn't the case. On the open market, of course it is. There is no way they will get $10 a share for it at first. Just isn't going to happen. Not only that, but there will be many many fewer shares available for sale, so less money will be brought in on the deal in the end. Time will tell on this. In NCTs case, the new REIT isn't for it's multi family property portfolios, but for their MSR business. It's a different type of market so of course both will trade at different %'s to their dividends. Lets see what happens when all the dust is settled.
Oops, I haven't really followed NCT, so sorry if I got that a bit wrong.
I also felt that IRT was going to pray on the financially ignorant. RAS management claims that at the time IRT was being formed there was no market for taking a new REIT public. That may well be true as the marketplace has shifted dramatically over the past 18 months or so. Now securitization s can be done, albeit for certain asset classes. Now secondaries have been raised for many many REITs.
They may get a good multiple. They will only need to pay 6% to the underwriters, while the private broker network was going to get 10%. I guess they will be compared to any other REITs that just hold apartment buildings. I haven't looked for any, but some must exist.
Fun to watch. Not hanging my hat on it, but it would be great if it raises a good amount of cash and trades at a high multiple to cash flow.