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Crexus Investment Corp. Message Board

  • quantuon quantuon Mar 30, 2012 12:30 PM Flag

    is 10% enough???

    Back of the envelope it looks like $1/shr is reasonable going forward. They have about $.36/shr in accretion to book for the next (conservative) 3 years and interest is about .62/shr on loans/debt not financed and maybe a few cents for that cash/funded loans....i'd expect that cash to go to work but lets keep that out...so $1/shr seems reasonable....I noticed that a lot of the loans are IOs and a fair amount mature in '12/'13 some of which carry a fair amount below cost...hopefully that is just where we have them marked now vs some default probability...but it makes one wonder is 10% yield the right number given risky portfolio (and we are in the sub/mezz position)? any thoughts?

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    • after further review, $1/shr dividend looks to be on the high side...reading thru their release, they have only 38.6 mn of accretable discount and depending on amortization period, it can alter divvy quite a bit...they have a lot of discounts coming due this year but hard to say how much of that is accretable...i went through their portfolio and they'll probably earn 58.2mn w/o accretion then, assuming that 38.6 is over two years (maybe its one, maybe its three?), we have 84 mn vs 19mn in costs (1.5% x SE ~= 15mn goes to FIDAC! nice deal!) means about 65 mn in income or 84c/shr or 8.25% divvy yield....could vary from .68 to $1 /shr....we better lever up to reduce that %pay-out to FIDAC......

 

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