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Capital Trust, Inc. Message Board

  • deeremanuk deeremanuk Aug 20, 2008 9:44 AM Flag

    I'm Buying More In The $12 range

    1. Insider buying - CEO post earnings report
    2. Guidance during conference call $.60 Div
    3. $22 Book
    4. No non performers after recent write off

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    • I am now being aggressive at this price - looks like the bottom.

    • Selling at close to half book and with a 20% plus dividend (which according to guidance is felt by management to be sustainable) - I am willing to cautiously average down. I am not backing up the truck, although I am prepared to on any good news.

    • It may take some time for the "difficulties" to work out. What is the likelihood of dividend cut in the next 6 months?

    • I bought in after CT tripped one of my filters based on Div Yield, PE, Mkt Cap, and FFO.

      My subsequent due dilly (after trigger, pre purchase):

      ~ (+) 0.60 div still gets me a good yield
      ~ (+) still FFO positive
      ~ (-) may not be FFO positive if Macklowe doesn't unwind in a positive way. Though there is upside on Q4 earnings if Macklowe ois somehow recoverable.
      ~ (+) 1 yr credit extensions from MS and Citi...
      ~ (-) They need the JPM/Bear extension, and that's still up in the air...
      ~ (+/-) CDOs still meet all tests by the same margin as when they were originated. Thus may not have to repurchase.
      ~ (+) May have asset mgmt bonus at year end from managed funds... = bonus divy?

      The big overhanging cloud is the whether mgmt has a good read on their markets. That mgmt missed the "quick deterioration" of the Macklow situation leaves me a bit worried about their judgement one whether to impair any more assets...

      Disclosure: Long @ $13.22

      • 1 Reply to thegooberbutt
      • Follow up on a couple of points:

        the Macklowe loan has a $50M reserve against it, so anything they get out of it from here is gravy

        CDOs - CT is buying some of their CDO issues back from the stressed IBanks at crazy yields - the reasons for this are clear: they know what is in them (since they did the initial underwriting) and they are buying at an unreasonable discount (due to distressed sellers and the overall credit market disarray).

        I think management has an excellent read on the markets. The Macklowe writedown was due to the single transaction having trouble because of the sensed distress of the seller - not the actual property fundamentals. The GM building sold at a 4.4 cap rate - same market as the buildings they own a mezz piece on at the 74% LTV level, if my memory serves. Does a 4.4 cap sound like the building was impaired beyond a 26% discount? I think not. Unfortunately, Macklowe was a forced seller. But, it has been my experience that CT is a very conservative bunch and they'll come out OK at the end of the day overall.

        I'm going heavy long very soon.

    • Sound reasoning.

      I find it absurd to think that Sam Zell won't be able to roll his notes in December, or even before. These guys have plenty of access to capital markets.

      But, the stock trend is extraordinary. It's in a free fall.

      I don't get it. Beyond my pay grade.