Federal gov bullies routinely take money just because they can. For example, I have been to a few insurance agent training seminars lately discussing how the Dept of Labor has a stated goal to audit 100% of groups in USA. They apparently routinely come in, demand an overwhelming amount of documentation and offer to leave for X amount of money. I heard about one company where DOL came in and offered to settle for $100k BEFORE any accusation that the company was doing anything wrong. They settled for $50k. This apparently happens a lot. Another company, group size of only 2, got a 9 page list of all the documents they had to produce within 10 days (I have the list). Again, out of the blue. No reason to suspect they were doing anything wrong other than that DOL knows that no company can possibly do everything right since the regulations are bigger than the planet. Careful how you vote, because we are not a free people. Not even close.
IRT will do really well when they get the payout ratio down and show it consistently going in the right direction. I like their goals as mentioned in the CC. Lots of insider buying needs to show up too. And if they could separate themselves from the mistrust surrounding RAS management, it would be in the 10's as is now. NXRT is another similar REIT with a lot of insider buying.
In the IRT call, they were very clear that the current price is a crazy place to do a secondary. Why don't they think the current RAS price is a crazy place to do a secondary?
RAS does appear to be a bargain here, but management thinks this is a great place to sell. Until they give a good explanation for the crazy cheap secondary, I don't see RAS going anywhere. Lack of trust demands a high premium.
How will this affect RAS?:
More than $53 billion out of $156 billion worth of securitized commercial mortgages that are set to mature in the next two years may find difficulty refinancing or require more investor capital, according to data compiled by Real Capital Analytics.
I agree that this should be a positive for the preferreds. And the only reason I can think to do this now is they see a deal they can't refuse. And that may be IRT. But you would sure think they could just sell more preferreds.
I haven't looked at the CC yet, but did they give any hint at raising equity? Seems like an awfully high yield to pay. I would have let it run for a while. At the least, they should communicate a reasoning for doing it now. Sheesh.
Good morning guys, just one quick question. Does the body agreements we sender [ph] and Monarch have any sort of break provision if IRT stock price drops below certain threshold?
Scott Schaeffer - Chairman, President and CEO
It does. Now see - the agreement which, the merger agreement, not within specifically, it's the merger agreement. 15% below the RMZ, a change down to more than 15% of the change in new RMZ.
Scott Schaeffer - Chairman, President and CEO from CC:
I would like to take a moment to summarize our plans for funding the transaction and our longer term plans regarding our balance sheet. To fund the transaction we will assume and require 161 million in mortgage financing, draw down 262 million from our new credit facility and fully utilize our new 120 million interim facility. The Trade Street shareholders will receive approximately 16 million IRT shares and we will use approximately 11 million of cash from IRTs balance sheet. We will not issue common equity at current levels to fund any portion of this transaction.
Let me repeat one part: We will not issue common equity at current levels to fund any portion of this transaction.
This is exactly what I guessed would happen. They should have settled before they had to admit to stuff. It will be very hard to defend themselves with a confession on their site. But yes, they should buy RVP and put a plug in the dam.
I was wondering about that too. IRT has always reported the day after as I recall. Would they dare report something bad the day before RAS earnings? I doubt it.
"On RVP’s request for lost profit, Judge Davis denied RVP’s request for an additional $260.7m in the form of wrongful profits earned by BD through false advertising. But he did so because he believed that the trebled antitrust award was a sufficient monetary sanction to BD, even though he agreed with RVP that BD’s conduct warranted disgorgement of its profits: “Here, the principles of equity require BD to forfeit a portion of its profits. However, BD has already done so by paying the trebled amount of its antitrust damages. The $340,524,042 BD must pay is a sufficient monetary sanction in this case.” Judge Davis’ confirmation of the trebling of damages should be interpreted positively, clarifying that trebling is mandatory for the $113m jury award, “RTI’s relief—trebled damages and an injunction—is adequate for its injury,” and that RVP deserves meaningful monetary relief for its claims."
This is important to keep in mind. I interpret it to mean, that, if for some reason the treble damages are denied on appeal, then $260M in lost profits is back in play (plus the $113M jury award would likely stay in force regardless). BD is just killing time, which is understandable.
They can't drag this out for long if they want a good chance with regulator approval. It's now or never, and I think they realize that. But who knows.