Well, the market may not have done its long awaited correction yet (at most it has fallen 2% from its recent all time highs), but RAS has. It is down over 17% since setting its one year high on May 9. It isn't alone in this. A lot of REITs have corrected over the last quarter. ABR has declined from $8.36 on March 11 to $6.78 this past Friday, a 19% decline. NRF has declined from $10.16 on May 7 to yesterdays close of $8.30, an 18% decline. Bottom line, the decline isn't about RAS. It's about concerns about the possibility that the Fed will cut back bond buying and increase interest rates. It's about concerns about a general market correction. And it's about taking profits on the outsize gains that all of these REITs yielded over the last year. Even at current prices RAS is up nearly 2x from where it was a year ago.
It can be argued that RAS was due for a correction, as it had gone up nearly continously for over 11 months at that point, more than doubling from a close of $3.99 on June 4, 2012 to a close of $8.74 on May 8. It remains to be seen whether the correction on RAS is over, but with a yield of nearly 6.4% at current prices and a strong prospect of higher dividends later this year, it remains an attractive investment for the short and long term.
"strong prospect of higher dividends later this year"
Yup. And those dividends, like all the dividends for the past many quarters, have been RETURN OF CAPITAL!
RAS is still posting loss after loss every quarter, as the book value continues to decline.
Small wonder that Mr. Market isn't fooled by the Foulgerian touting, razzamatazz, hand-waving, spin-doctoring, not to mention smoke and mirrors.
It ain't magic, folks: FFF is still riding his hobbyhorse one-trick-pony down the slippery slope to oblivion.
Poor Foulger. Keeps reaching into his bag of "informal logic" trickery, and coming up with the same shabby prevarications time and again.
He never learns.
But don't feel too sorry for him.
He's been doing it to himself for a long time. Nothing new under the slum.
There is no smoke and mirrors here, fool. RAS has substantial and rapidly growing operating income, is generating substantial and rapidly growing free cash from its operations, and has strong and growing adjusted funds from operations. You can ignire all that, fool, or you can focus on GAAP earnings, which mix the oil and water of earnings and changes in asset values. Your choice. If you think GAAP is the more important number, bet it all short. It won't hurt longs over the long term.
Oh, and no need to feel sorry for me. Over the four plus years that you've been beating the GAAP earnings horse, RAS has gone from $1.41 (post split 47 cents to its current $7.71. I'm making lots of money on that gain, and dispite your foolish nicknames, I have you and your short buddies to thank for much of the volatility that has given me an average prie that is less than 2/5's the current price. So thanks, but it really is time to go away.
Pretty bad translation, since I don't talk about my position or trading in the post. More to the point, I don't need to convince anybody of anything. The market will do what it does regardless of anything I say. The odds are pretty high that RAS will move higher in both the short and long term for reasons that I lay out in subsequent posts, but that won't happen because I said anything. It will happen because RAS declares another dividend, gets approval to take IRT public, sells a new securitization, and/or reports good results.
I've simply observed that those things will probably happen, and of course bet accordingly.
i think it is far more sector-related than simply ras. look across the whole board of reits. almost all have retreated after market gains much better than the broad s&p.
what seems to be weighting on most r.e. issues is the fed and q.e. and what an end means? given the overall economic recovery, as well as the different reit business models, i suspect this is simply a breather till more clarity comes. what is important for ras is continued investment opportunities. they continue to rebuild and perform well.
I think that's probably right. I think the market is more fearful of Fed actions than the probabe reality of those actions, but that's pretty normal for the market, which constantly overshoots and undershoots . But that just creates volatility that can exploited over the long term.
In the short term:
1 - We are likely to see some news this week coming out of NAREIT. We've already seen the slides they are likely to use (posted last week), but the slides may change by Thursday and you never know what will actually be said or what will come up in the questions. The NAREIT presentation has helped to move the market price in the past. It's not something you want to be blindsided by.
2 - The SEC is evaluating RAS updated filing for Independence Realty Trust (IRT, which remains an avaialble ticker). They've had the amended filing in hand for about 3 weeks now, and while it is possible they'll kick it back for more changes (you never know), the odds are high that IRT will be approved this month, and fairly high that it will be approved by mid-month. It's approval will almost certainly move the market price higher.
3 - We should see a 2Q dividend announcement around June 18. I think the most likely outcome is that RAS will declare another 12 cent dividend, but some feel that a 13 cent dividend is highly likely. I say it is possible. Dividend announcements at par or better usually move prices higher, at least until ex-div, which will probably be at, or shortly after, the end of June.
4 - RAS is working on its first new securitization in over 5 years right now, a bridge loan securitization that should offer the market attractive rates. That will probably happen in July. When it does it is likey to move the price higher.
5 - RAS appears to be having a strong 2Q. We'll learn about that in late July, probably sometime after July 23. A strong 2Q would probably move the price higher, much has as the last three quartery reports have.
Bottom line, the prospects for higher prices over the next two months look pretty strong, with at least five catalysts for growth that can be reasonably projected going forward.
Another predictable short term event is now in the can. RAS announced a second quarter dividend of 13 cents (another increase).
"RAIT Financial Trust (RAS) (“RAIT”) today announced that on June 20, 2013, RAIT’s Board of Trustees declared a second quarter 2013 cash dividend on RAIT’s common shares of $0.13 per common share, representing an 8% increase from the prior quarter's dividend of $0.12 per common share and a 63% increase from the second quarter 2012 dividend of $0.08 per common share. The dividend will be paid on July 31, 2013 to holders of record on July 12, 2013. The ex-dividend date is July 10, 2013."
IRT filed an amended prospectus yesterday. Without any surrounding events (a quarter report or a property acquisition, that certainly means that the SEC is actively evealuating the prospectus and that their dialogue with RAS/IRT has led to the change. Beyond that, an amended prospectus filing is often the last visible action before an effectiveness notice is granted, so the odds of IRT going to market soon just went up.
RAS' NAREIT presentation turned out to be today, so that's one event that is "sort of" out of the way. I say sort of because the audio stream from the presentation hasn't shown up online yet (it is still being "archived"). On the other hand, RAS price pull back was sharply reduced today (just two cents) and the powers that were trying had a hard time getting it any lower than the closing price.
At this point it's too early to conclude much of anything based on the event. RAS reached its lows for the day about the time the presentation started (about 3:00 (if they were running on time) and then went up.during the Presentation. I would expect that any impacts of REITweek on investment strategy would be more cleanly visible next week (after the conference is over),
In the meantime, there are several more events to work through over the next two months.
IN the long term RAS prospects look even stronger.
1 - If it just holds serve with the things that it already has cooking, the dividend should rise to at least 15 cents by the end of the year. That was initially projected in response to a question on the 3Q 2012 conference call, and RAS looks to be ahead of that projection right now. A 15 cent dividend ought to move the share price to at least $9 (a price RAS has already been within 15 cents of this year) and probably over $10. There is at least some chance the dividend will be higher than that given that results appear to be somewhat ahead of the 3Q projection.
2 - While we aren't going to see exponential growth, securitized bridge loans and management of IRT should accelerate RAS earnings growth in 2014 and 2015. It is not unreasonable to expect dividend increases and share price gains that move it into the mid-teens ($15 or more) over that time frame.
3 - Growth will diminish the per share impact of RAS' NOL loss carry forwards. Sale of properties to an operational IRT will, moreover, transfer any new depreciation-based NOL's to IRT. As a result RAS should need to pay higher dividends, as a percentage of taxable income, even before its state NOL carry forwards expire in 2016. Federal NOL carry forwards will continue until 2028, but RAS should start to have to pay dividends that are higher than 60% of AFFO by 2016, which will move dividends, and the stock price, even higher. If current dividends were set based on taxable earnings, we'd be collecting close to 20 cents a share on the common now. I think dividends are likely to move above 20 cents a share no later than 2016, and probably well above. I expect RAS to move to at least the high teens ($18 plus a share) on the basis of that move.
Bottom line, RAS isn't likely to return to its early 2007 highs in the immediate futrue, but it IS likely to at least double over the next few years based on a substantial increase in earnings and the dividend.