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JER Investors Trust Inc. Message Board

  • bapnro bapnro Feb 18, 2009 10:42 PM Flag

    JRT Screw-Up Story

    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.

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