The JRT screw-up story is quite simple and I will elaborate it a bit because it looks like some discussions on this message board come from the company management.
Here is the link to Revenue Procedure 2008-68. This procedure was created under big pressure from NAREIT. It basically temporarily allows, but not requires, REITs not to pay dividends (or at least not to pay 90% of dividends) and still keep REIT tax status.
This procedure was discussed in all REITs and majority of management teams and Boards decided that it was too dangerous to use it because CASH dividends is what mainly keeps money in REITs. Using this proceedure was generally recognized very unwise unless a company is close to BK.
JRT was not close to BK but still decided to take a chance at expense of shareholders. The result is quite simple. The shares dropped down like a stone. Investors basically realized that their were given paper instead of money.
It was possible to cure this with CASH dividends. However, again, not-so-smart JRT management team and board decided to take a shortcut, the reverse split. Once it was announced, the shares went down even more.
End of story so far.
The story might continue though if the same management and board continue to make stupid moves. The only smart move now is a good CASH dividend in first quarter. There also should be statement from the company that it will try its best to maintain CASH dividends in the future.
Any other games might kill this company and destroy what is left from shareholders value.
Screw up is an mild understatement.
In just 3.5 years of being public, JRT's stock has lost 99% of its value. At this price you would think they are BK. Sheesh.
Tomorrows reverse split may keep JRT listed, but it probably will not shake its huge short interest. I am not really looking forward to my JRT shares getting shorted down and devalued another 2 bucks post split.
My investment in JRT has lost 67.8% (on paper) since I bought before the recent "special dividend". I wonder what super brainy ideas JRT will give its shareholders next quarter?
Now that JRT has found it home on the pinks, it's time to bump this topic once again as a reminder...
I sold out of JRT after I took a hell of a wholloping after their "special" and then a hasty 10 for 1 reverse. After the reverse, I decided to dump off my shares when I saw their new issue would dilute my position into oblivion. Apparently it was a wise and reasonable decision for me to dump JRT.
I don't think I going back into JRT's pool again. Once bitten twice shy. Sorry.
<It was possible to cure this with CASH dividends.>
NO, they could not pay it in cash. They are prohibited by their JPM repo agreement from paying out more than $2.5M per quarter in cash. Because of the huge amount of distributable divvys they had to pay out ($22M = 30cents regular divvy + 58cents special), they had no choice: They HAD to pay out most of it in stock. Please see my prior post:
You people should grasp that the fact that we're in a once in a lifetime credit crisis that has taken down almost every company in the space, sell your shares and move on. At least, post the facts. I don't know if they are close to BK or not, but I do know they had no choice but to pay out most of the divvy in stock.
>They are prohibited by their JPM repo agreement from paying out more than $2.5M per quarter in cash.
So, um, why would JRT enter into such an agreement?
A bit odd, wouldn't you say?
They paid out $10Ms in cash last year. Why would they agree not to do so this year, choosing instead a path available to the nearly bankrupt?
One would sure guess that whatever happened in there, it had a lot to do with available choices.