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RAIT Financial Trust Message Board

davisfoulger 739 posts  |  Last Activity: 13 hours ago Member since: Aug 21, 2007
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  • davisfoulger davisfoulger 13 hours ago Flag

    I said no such thing. What I did say was that management has repeatedly expressed unhappiness about the relationship of the share price to the dividend over the last 10 months. I certainly said that before the dividend was cut and I not surprised when the board took action. I wasn't happy that they took action, as it dropped my roughly 26% yield based on my net cost per share to roughly 13%, but 13% is still 17x higher than my highest bank account interest rate. In the meantime, RAS can afford to pay more and will soon need to pay more, so I strongly expect that my yield on RAS will rise more quickly than my bank account interest rate and that the share price will rise with it.

    That's not double talk. That's good long term investment.

  • davisfoulger davisfoulger 13 hours ago Flag

    You'll have to tell me what the lie is. Time will tell of the price will rise above $2.77 (my current break even price) in the future. I strongly expect we'll see much higher prices and soon. I could be wrong, but I don't think I will be. That's just my opinion, but it's no lie.

    In the meantime there is a yield associated with every price I bought at and a yield associated with my net cost per share. I've never bought any shares that aren't getting at least bank interest rates. Those shares were sold (FIFO) long ago, but I own many more shares now and the shares I own get a composite yield of 13% at the current 9 cent dividend.

    None of that is a lie, but it's amusing watching you use an Ayn Rand quote to talk about lying. I haven't, even by her standards.

  • Reply to


    by drzorba66 Feb 4, 2016 12:10 PM
    davisfoulger davisfoulger 13 hours ago Flag

    1 - Pretty good assessment in most respect.

    2 - I think the loan business was good to RAS before Daniel arrived and that has been good again since Scott took over again. I don't think management is making a mistake in building that business, especially insofar as RAS will need to both sell real estate to pay off principal on its foreclosures and to roll over some of the content of RAIT I and II as it closes them out over the next two or three years. Securitized loans provide better returns than direct RE ownership, so its not a mistake from that perspective either.

    3 - I hope they are taking advantage of the opportunity to rebuy shares right now as well, but would point out that RSO is down considerably despite having spent large amounts of money on share repurchases. Buybacks are generally overrated, in my view, when compared with building the business.

    4 - You are right about the this being a good time to buy.

    5 - I hope management notices your post or that you pass it on to them. I have no special ability to reach them. I realize that I have been falsely accused of having a working relationship with management, but I'm just an investor who usually goes to shareholder meetings. Your position probably rates more attention from management than mine does.

  • davisfoulger davisfoulger 20 hours ago Flag

    Yes. Thanks for the shares. At last check (yesterday) my bank account was paying .75% annual interest but the shares I bought at $6.13 were paying a 5.9% yield. There have been better prices since (I'm getting 15.7% on the shares I bought at $2.30), but the market is never entirely predictable except in one fundamentals: companies that make money on a continuing basis tend to have prices that rise over the long term. I can wait for higher prices and higher dividends and get paid while doing so: largerly because there is very little likelihood that RAS will fold its tent and go away.

  • davisfoulger davisfoulger 20 hours ago Flag

    Here's my "great humbrage" (a series of questions that the person who wrote this never addressed.

    "So what do you think is going to happen?

    "Are commercial real estate owners going to stop borrowing? Is the bridge loan business going to go away? Are borrowers going to stop paying en masse? Will RAS be prevented from foreclosing if they do?

    "Is the multifamily apartment business going away any time soon? Are rents and occupancy going to seriously drop? Would RAS somehow be prevented from renting foreclosed properties at a lower cost than the prior owners could operate those properties at?

    "Is the securitization market going away? Will banks, insurance companies, and retirement funds, among others suddenly decide they don't want to own bonds on mid-market commercial loans?

    "Is the value of commercial real estate going to suddenly drop through the floor? If it did why would it be any more than a cyclic decline? And wouldn't a normal decline be good for its special servicing business?

    "Is the government going to ban shadow lending? If it did would RAS still have a viable business as a real estate owner/operator?

    "Does RAS have recourse debt that it will be unable to repay?

    "Are we facing another great recession?"

    I note that, five months later, none of these things have happened and that there is no indication that any of these things are even risks. Borrowers are still borrowing. Bridge loans continue to be written. Securitizations continue to be written. Rents and occupancy continue to rise. Institutions are still investment in bonds and RAS. Commercial Real Estate values continue to climb. I note that, five months later, RAS has not "met is Waterloo" (as the author projected). The price is down, mostly because dividend has been reduced in response to the market being down. But that's the sum of the problem. All indications is that 4Q will be an excellent quarter.

    Bottom line, you've inaccurate recycled five month old FUD. It's still FUD,

  • davisfoulger davisfoulger 21 hours ago Flag

    I'm not manipulated CAD. I am describing it as it is. My description is in line with the company's descriptions. Your's is not.

  • davisfoulger davisfoulger 21 hours ago Flag

    I don't know why they changed from their AFFO mesure to the more conservative CAD measure except that CAD was the number that the board was using in declaring dividends. It was possible to infer that they were using a more conservative number than their AFFO measure based on the fact that the dividend was being estimated as a percentage of a number that seemed to be smaller than AFFO. It was over a year before we actually started to see the actual number (CAD) that they were using in quarterly statements. It started to show up in investor presentations earlier than that.

  • Reply to


    by drzorba66 Feb 3, 2016 9:32 AM
    davisfoulger davisfoulger Feb 4, 2016 10:47 AM Flag

    Don't conflate the secondary and the dividend cut.

    The secondary was an exchange of shares for capital that should have had the effect of increasing book value and the market initially reacted to it pretty predictably. Unfortunately it was followed by a sinking market (what has now been confirmed as a formal correction). Indeed the price initially held up well in the face of the sinking market. Then the price sank with the market.

    The 50% dividend cut resulted in a (as I write this) less than 50% price cut. That's about what I'd expect. That said, the market continued to sink and RAS has resisted going along for the ride.

    I'm not applauding any of that. I'm simply pointing out that the market isn't really disagreeing with me. That's especially true when you look at what has happened with other MREITs over the same interval.

  • Reply to


    by drzorba66 Feb 3, 2016 9:32 AM
    davisfoulger davisfoulger Feb 4, 2016 10:35 AM Flag

    You demonstrated competence in accounting. You apparently did not demonstrate an understanding of what the underlying constructs mean.

  • Reply to


    by drzorba66 Feb 3, 2016 9:32 AM
    davisfoulger davisfoulger Feb 4, 2016 10:32 AM Flag

    Continue to do what?

    Will it continue to grow? It can only recycle real estate into higher yielding loans for so long. When that happens it may only be able to roll old bridge loans into new bridge loans and write new bridge loans at the rate at which earnings will support them. At the current dividend and earnings rate that's about $150 million of new bridge loans per year plus whatever can be done from reclaimed principal from rolled over loans and securitizations (about 5x that principal). That translates to one or two new securitizations a year (about the rate they've been doing. Access to new capital would allow them to speed up it's bridge loan business, but it won't prevent growth.

    Will it continue to pay dividends? Yes, and the recycling of real estate into loans will allow the dividend to grow at the same time that depreciation will make earnings more obvious to investors. When the RE that can be usefully recycled runs out the slower growth in loans will slow dividend increases, but it shouldn't illiminate them.

    Will it continue to function as a business? Of course. See above.

  • davisfoulger davisfoulger Feb 4, 2016 10:19 AM Flag

    No. It's a gain. You are trying to deny the facts. Non-cash costs don't put a company out of business. Cash gains can allow any company to stay in business for decades in the face of non-cash losses.

  • Reply to


    by drzorba66 Feb 3, 2016 9:32 AM
    davisfoulger davisfoulger Feb 3, 2016 7:07 PM Flag

    If you have you clearly didn't understand it.

  • Reply to


    by drzorba66 Feb 3, 2016 9:32 AM
    davisfoulger davisfoulger Feb 3, 2016 7:06 PM Flag

    The $64 million is wiped out by other costs. You just aren't bothering to look.

  • davisfoulger davisfoulger Feb 3, 2016 7:04 PM Flag

    No. Not at all. IRT just bought another another big REIT. It showed a big GAAP profit and a quarter loss on operating income.

    All that rolls into RAS income in consolidation, but the money mostly belongs to IRT, which cancels most of it out if you remove the effects of the smaller company (IRT). With IRT consolidated RAS shows an operating income loss, an FFO loss, and a net income (GAAP) loss, but a CAD gain of 27 cents per share. With IRT removed, RAS breaks even, shows GAAP and FFO profits, and has CAD of 28 cents per share. The difference for operating income is IRT's depreciation and acquisition costs. The difference for GAAP and FFO is TSRE- related separation and financing costs, a one-time gain on the value of TRSE's properties, and a one time oversized loss attributed to noncontrolling interests.

    I know you actually haven't looked, but the math isn't complicated.

  • Reply to

    "doubtless brought in big block buyers"

    by duh_count Feb 3, 2016 4:41 PM
    davisfoulger davisfoulger Feb 3, 2016 6:51 PM Flag

    Most of that reporting is 3Q. There are 17 4Q filings right now. 5 buys including two new positions. 6 sells including two sold outs, and six stand pats. Really big institutions have stood pat. And now we are seeing some big increases on 13D's that haven't made it into the quarterly numbers yet, but they represent over 8 million shares bought by institutions in 4Q and January.

    It doesn't look like you've given much thought to the "real numbers, real facts", but are instead expressing an unsupported opinion. 4Q institutional holdings could be up or down from 3Q, but the smart money (e.g. institutions that own their own REITs like Tiptree and Blackrock), are betting against you. Lucky me.

  • Reply to

    Institutional numbers updated through 12/31/2015

    by duh_count Feb 3, 2016 4:49 PM
    davisfoulger davisfoulger Feb 3, 2016 6:41 PM Flag

    LOL. Selective reporting, as always. Before I say anything else, however, I should note that roughly 80% of 3Q reporting institutions haven't reported for 4Q year. That said, here's some you left out:

    CREATIVE PLANNING 12/31/2015 520,266 shares (up 13,300) (up 2.62%)
    CALIFORNIA STATE TEACHERS RETIREMENT SYSTEM 12/31/2015 168,407 shares (up 2,914) ( up 1.76%)
    CAPITAL INVESTMENT ADVISORS, LLC 12/31/2015 10,200 shares (up 10,200) (up 100%)
    SIMPLEX TRADING, LLC 12/31/2015 3,043 shares (up 1,114) ( up 57.75%)
    QUADRANT CAPITAL GROUP LLC 12/31/2015 2,638 shares (up 2,638) (up 100%)

    None of this means very much, as most institutions haven't reported, but there is evidence of 6 institutions selling, 5 institutions buying, and 6 institutions standing pat on their 3Q investments. That's likely to be a pattern. What we won't know for at least two weeks is what the numbers actually look like.

  • Reply to

    Institutional numbers updated through 12/31/2015

    by duh_count Feb 3, 2016 4:49 PM
    davisfoulger davisfoulger Feb 3, 2016 6:38 PM Flag

    It bought its entire position in 4Q and in January. That will probably add significantly to the 4Q numbers. Tiptree was not a reporting institution at the end of 3Q.

  • Reply to


    by drzorba66 Feb 3, 2016 9:32 AM
    davisfoulger davisfoulger Feb 3, 2016 3:13 PM Flag

    RAS isn't a normal REIT. I've said this before, but you might get value from paying attention this time. RAS is a bit like a pawn broker. The borrower puts equity. RAS gives 70 to 80 cents on the dollar for it in the form of a loan with a higher than usual interest rate and then leverages it in a securitization. If the loan goes well RAS collects a high interest rate and a big spread. If the loan goes bad it winds up owning property for 70 to 80 cents on the dollar and can probably operate it at lower rents than the owner could. It's a long term business, but loan business provides better returns than the property business does. That's why RAS continues to focus on that portion of the business.

  • Reply to


    by drzorba66 Feb 3, 2016 9:32 AM
    davisfoulger davisfoulger Feb 3, 2016 3:08 PM Flag

    LOL. You remain as wrong as you were before.

    I deal with all the one time events too (that's easy to do; not much effort). But I account for what you don't account for, including consolitation effects and the cash that RAS retains.

    I don't see any value to your computaiton ... and I don't think it's likely to work out as a projection of anything useful in 2016.

    Some shareholders misunderstood it and bailed. You've simply re states a misunderstanding they have. You still have it wrong.

    Other shareholders properly understood things and expanded their positions (at lower prices; lucky us). The fact is that RAS is making a lot of money. You've simply resolved not to look for it.

  • Reply to

    How RAS did in 3Q excluding IRT

    by davisfoulger Jan 28, 2016 12:42 PM
    davisfoulger davisfoulger Feb 3, 2016 2:59 PM Flag

    I did include it. I also subtracted the TRSE costs assocaited with acquisition, severance, resolving financing, and recognizing a $23 million loss attributable to non-controlling interests.

    I keep telling you this and you keep ignoring those other things. Yes, IRT's big gain made 3Q very profitable on a GAAP basis in 3Q. And yes, the only reason RAS reports a loss is the operating income loss that IRT also reports. Everything else washes for RAS in consolidation for the simple reason that it is IRT that has the gain. RAS just reports it in consolidation. It isn't really a direct gain for RAS.

    I realize this confuses you. I wish it didn't, if only because you have the expertise to figure this out. In the meantime I'll keep pointing to the things you are ignoring.

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