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NorthStar Realty Finance Corp. Message Board

  • dar200 dar200 Feb 24, 2009 3:08 PM Flag

    Preferred is golden

    I'm surprised the preferred hasn't popped more. Liquidity is fine. Loans are fine with one non-performer posing little risk of eventual loss. No significant debt maturity until Oct 2010. NRF will survive this recession if any mortgage reit will.

    Hamo answered my question on new business. He thinks banks will be dumping distressed assets for fire sale prices. Right now, he said the best investment they can make is buying their own debt at huge discounts. I agree.

    NRF doesn't have to pay preferred dividends if there is no taxable income, BUT the unpaid dividends accumulate and must be paid in full before common gets the next penny.

    I'm not selling common at these prices even if the dividend stops. My most pessimistic calculation of real book value is 5.48. I'm not selling for 2.60 while nrf still has plenty of staying power.

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    • I own nothing but preferred in a few selected mortgage REITs (but own some common stocks in areas outside of the mortgage REIT sector) and have been well-rewarded in terms of dividends from the preferreds.

      Still, I also believe that NRF common stock is a good buy at current prices as NRF should rise significantly in time as the company continues to buy up its debt with ample liquidity.

    • Dar, I agree totally, and I'm in at $7.

      Dar, am I correct in stating that taxable income for 2008 was basically $25m (looking at the balance sheet release). I think they might make some money before year-end - that salary expense cant possibly be done again! That was .20cents on its own. They still have that nice depreciation, but that too is not going to be included in any payout.

      This stock is going nowhere unless they get new business...and alot of it.

      Gains for 2008 were roughly .51c and now they dont have to pay those out - so no stock dividend, no cash dividend.

      How the hell do they figure $8 BV?

      • 1 Reply to ajv777
      • <<<<Dar, am I correct in stating that taxable income for 2008 was basically $25m>>>>

        I doubt it. I think it was substantially higher based on the taxability percentage of dividends paid...1.13 per share for common plus all the preferred.

        You can't even guestimate taxable income from the income statement. I will be able to calculate it from the 10-K disclosures when it is filed.

 
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