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RAIT Financial Trust Message Board

  • sme20_98 sme20_98 Aug 9, 2013 10:25 AM Flag

    RAS is Still only $2.43 pre split

    Basically this stock has not moved since the 1 for 3 reverse split. While I still feel it belongs between $10 and $12 based upon its AFFO and dividend increases, the market continues to disregard it's progress. Very sad . it will take a major move in the dividend-to .20 to .22 cents per quarter for this stock to gain any credibility. Also, once Taberna paper is fully marked to market(according to the fund balance calculation approx. $300 million mark up to go) I think the market may start to respect RAS operations more, but that is probably a year away.

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    • You aren't wrong in noting that higher dividends will lead to higher prices and that substantially higher dividends will be needed for substantially higher prices. Those dividends and prices will come. We should see a 15 cent dividend (hopefully more) by the end of the year. 18 to 20 cents is likely by the end of next year. 21 to 25 cents is likely by the end of 2015. RAS may even do better than that.

      But that's getting ahead of reality. Reality, for the moment is a 13 cent dividend (roughly a 7.1% yield. MREIT yields rarely dip much below 6%. RAS went as low #$%$5% a few months ago when we still had a 12 cent dividend, but I regard $8.85 that as a squeeze price. I didn't expect the price to go that high early in the year, didn't think the yield was sustainable, and ultimately sold my trading near that high ($8.80). When others were saying that the price was going to $9, $10, and $11, the best I could support them with is that I hope you are right, but I'm still looking for $9 near the end of the year when the dividend goes to 15 cents.

      Reality is that RAS is trading on a combination of its yield and its prospects to deliver a higher yield. From that perspective it is doing about as well as you might reasonably expect an MREIT to do. At RAS highest prices in early 2007 RAS hit $39.25 (pre-split) on a 75 cent dividend. That's a 7.6% yield. The market is giving RAS more recognition at its current price (a 7.1% yield) than it did then.

      I don't regard that as sad. I regard that as progress. 12 months ago today RAS closed at $4.65 based on an 8 cent dividend. The price was lower, but the dividend was lower too. If RAS was trading at the same yield it did a year ago today, the price would be about $7.50 (roughly the average price over the last two months). I strongly suspect that the price will move back above the number before the next dividend is announced.

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