I was and still am disappointed with the apparent discrepancy between Q2 additions to loan loss reserves and Sugarman's comments at NAREIT about how they "have a handle on most of their problem loans."
I'm convinced the market is bad enough whereby even management can't make an accurate forecast. However, I'm also wondering if at the time when Sugarman made this comment (NAREIT presentation was beginning of June) he was fully aware of what SFI's Q2 additions to reserves would be.
Isn't this possible since the investor week presentation was made at the tail end of Q2? What do you all think?
FWIW. Estimates are useless. Take the MRQ and just look at how wrong the analysts' projections were.
It's seems a pretty safe bet that for the foreseeable future iStar's "revenue" will come just as much, if not more so, from asset dispositions than it will from interest and principal repayments.
Nah, you can have a grasp of what is coming with what happened. Last quarter they have negative income of 292 million even after the 200 mil gain in debt purchase. That means they are short 492 mil without the debt buyback. Let's take out the "other expense" as well since it's extraordinary high. It becomes negative 439 millions. Loan loss provision is just 438 millions so without any loan loss provision they are still in the negative territory. Do I expect revenue increases in the coming years? No. Do I expect 0 loan loss provision in the coming years? No. This comes to the conclusion that without debt buyback it's hard for them to maintain the tangible book value.
I never said negative report = bond holders don't know what they are doing but I did say "you think the bond holders don't know what they are doing". I didn't say you said that, just you "think" that which is implied from your message " it looks as though SFI is lowballing poverty. So far it seems everything as a result is beneficial to sfi".
Again, you didn't post one writedown of a company that shows the specifics you desire for.
Look at Wamu: http://finance.yahoo.com/q/it?s=WAMUQ.PK
There is a big acquisition with tons of shares even it collapses shortly after. If Sugarman uses company cash to buy shares while he dumped his, he will get law suit and end his career for sure. He is smarter than that. What analysts report you are referring to and what you mean "extremely well rated" for short term liquidity? Is it even an "A-"?
This is what Sugarman said, from the transcript:
>I do think the watchlist and the NPL list reflect the great majority of the assets we have concerns about. And I do hope during
2009 that that list stops growing and actually stabilizes so that in 2010 it starts shrinking. But right now, I've got to tell you, we
still think a lot of borrowers have not yet recognized the decline in value that is taking place. They probably are out of the money,
and when push comes to shove, they are going to have to come to us with a very thoughtful proposal, because ultimately we
think, in many cases, we are the economic owner of the property, if not the legal owner yet.<
I'm not sure anything in the Q2 results is inconsistent with his statement.
As for the watchlist - It did not increase from Q1. It remains to be seen how many more loans change status from watchlist to NPL. We could potentially be looking at another 28 loans/$1.2 Billion more in NPL's.
No. I suppose it isn't terribly inconsistent. I guess it is all about how the statement is interpreted.
I am pondering whether or not the Q2 reserves were already determined at that point (during NAREIT) in the quarter.
"""""To maintain the book value, they need to use cash to buyback its debt. Looks like they are cash flow negative until second half of 2010, that means they have limited resources to buyback debt at this point."""
NO FACTS TO BACK UP THIS BS = BS. To know what they need to do to maintain book value, you have to know revenues, reserves, buybacks and what the economy is going to do. YOU DON'T HAVE SQUAT FOR ANY OF THESE FIGURES = BS FOR WHAT THE COMPANY NEEDS TO DO AND WHAT IT'S NEXT QTR WILL BE, LET ALONE 2ND HALF OF 2010. COMPLETE BS.
""""""negative report = bond holders don't know what they are doing"""""""
NO 'quotes' in the message you responded to moe, TO BACK UP THIS BS = SCAM BS.
Big reserves with no specifics as to why means they were justified and needed - AGAIN WITH NO SPECIFICS. The mere fact no one posts the reasons DOES NOT MEAN THEY WERE NEEDED. They may have been, they may not, but it certainly is convenient. Meanwhile we still have prepayments, buybacks bonds and stocks, pfd payments and Suga taking payment in stock price INSTEAD of cash - NONE OF WHICH IS CONSISTENT WITH A COMPANY GOING BK OR HAVING SHORT TERM LIQUIDITY PROBLEMS - ALSO NOTED IN ANALYSTS REPORTS POSTED HERE that SFI is still extremely well rated for short term liquidity.
Yes, COMPLETE BS MOVING ON TO MORE COMPLETE BS when the facts are noted and your 'facts' are asked for.
You can't read their revenue number? I have no idea what you mean "quotes" in the message. I also have no idea why you accused me of "apparently know more" since I just use the numbers they report and the words they said to support my argument.
You apparently a king of BS with no support of your accusation and telling me to post future quarter breakdowns to support my argument. Oh yeah, maybe I have to post the number of hair in Sugarman's head otherwise I must be bsing, lol.
The combo of nareit, q2 and poverty ARE NOT CONSISTENT IMO. At least 1 of 3 has to be complete BS.
nareit = official statement regarding the company.
q2 - official numbers and the statement we expect and are watching liquidity - meanwhile total npls have been ranked at the high range of 2 billion by one analyst - sfi has written off 1.5 to 1.7 billion with a large portion of that coming q2 (residential bottomed according to most). Meanwhile, watching liquidity closely has continued share buyback, bond buyback and even prepaid 4oo mil 3 months early.
Again, to me, it looks as though SFI is lowballing poverty. So far it seems everything as a result is beneficial to sfi. According to one, some bond prices dropped over 16%, share prices have dropped 20%, instead of sugar making easy money with his 4 mil shares and being 'bad mouthed', suga will now be a hero and deserving of his shares if 'somehow' sfi's so called watched close liquidity doesn't have to be watched in q3.
LD reminded me that sfi regains the asset on a fully paid loan. These loans were -per the banks- the CREAM of all sfi assets WHICH HAVE RETAINED SIGNIFICANT VALUE which may also be loan values that are significantly BELOW asset value. This would/could make significant funds suddenly available on a sale of just one or two prime properties. We also know very little about the inconsistent -via nareit- large writeoffs for npls. Even late payments could make a paying loan become a write off, hell it may not even take that to be able to write it off.
SFI's sudden and inconsistent with nareits official statement seems to be very coincidental with circumstances that benefit SFI all across the board.
100% of freemont money will soon be coming to SFI and outflow payments will cease - sometime in 2010.
Sugar is business and if a bond holder suffers or shareholders become weak, Sugar could care less.
All of the above are facts, what they mean are entirely dependent on interpretation.
When it announces good numbers, you feel good; when it announces bad numbers, you think they are just understating the company's performance to give them better price on buying back debt (because you think the debt holders know nothing). There is something wrong with the picture, my friend.
Sugarman is playing the stock and bond analysts, I think.
The decision on impairment and reserves are based on crude data, as the market is not active. I bet that if SFI needs to liquidate assets, the reserves are not enough.
Thus any numbers provided by the company cannot have too much sense. Clearly Sugarman was stupidly wrong to say these optimistic words in June investor conference.
It should be clear that most borrowers will not be able to pay back SFI at maturity. I think the number of nonperforming loans will eventually reach 70 or 80% of all loans next year. Expect more reserves, but keep in mind, SFI will try its best effort to not break the $1.5 billion limit in book value.
Hopefully, a lot of these loans will get resolved for some small loss. For these condo loans, once the residential real estate market recovers, SFI will get a reasonable payback.
Also, I do not expect big bond repurchase until after April 2010. After April 2010, SFI will have every incentive to aggressively liquidate its assets to repurchase bonds at discount. This is a game SFI may play until the end of 2010.
So the test will come in 2011. If you believe in a reasonable recovery of the real estate market (including residential, office, retail, industrial, commerical, etc.) prior to 2011, then buy or hold SFI. Otherwise, one should better get out.
"LD reminded me that sfi regains the asset on a fully paid loan. These loans were -per the banks- the CREAM of all sfi assets WHICH HAVE RETAINED SIGNIFICANT VALUE which may also be loan values that are significantly BELOW asset value."
Bingo. That's key. It would seem to me they are starting to put some asset sales in place. I also think they will be "swapping out" assets within the collateral pool. Albeit it is quite possible the newly encumbered assets will be of lower quality and therefore terms and conditions may vary.
Never the less, they purposefully made a decision to pay down most of Sept maturities for a specific reason and I'm sure it wasn't just because they happened to have the available cash.