What will happen if the loan(s) within the securitization stop paying? Ras will foreclose. There will be less cash flow generated from the securitization and therefore Ras will make less money from the securitization.
Ras plans/believes that the foreclosed real estate will retain enough value to pay off the loans or generate enough cash to keep paying the bonds that the securitization issued. This is what happened with Rait 1 & 2.
To paint a negative picture and see how terrible things could go........Ras could foreclose and find that there is toxic waste on the property and not only do they get no money for it, but they need to pay money to clean up the sight😀
In any case, I think the point DF is that the leverage is somewhat misleading.
You are thinking of the conduit loans (fixed rate 5 to 10 year loans) that Ras originates and then sells off into larger securitizations.
The bridge loans(3 to 5 year floating rate loans) are bundled into securitizations that are nonrecourse to Ras. The whole securitization shows up on Ras books because Ras controls the equity portion of the entity. The reality of these securitizations is that Ras has about 20% of the entity at risk.......the equity portion.
That's a big jump in price. I'm not certain I get the point you are trying to make. The latest move you are pointing to would appear to be having the exactly the opposite affect (whatever the exact opposite of biting in the butt......maybe kissing in the?)
I only draw conclusions based on what you post. I know nothing about you except for what you post. You could be my brother or sister for all I know.
Maybe EQR & AVB are viewed as a haven. So, all those flying to quality are headed there as well as government bonds. IRT, while almost doubling in size, remains a pipsqueak relatively.
Oh, yeah, I can see window dressing for Ras, but not sure on Irt.
Ed, the Daytona, FL land is seven parcels taken onto Ras books in 2011. It is on the books for about $25 million and has about $25 million of debt owed against it. I believe that the debt is owed to one of the Tabernas securitizations on a non-recourse basis.
The remaining $25 million of FL land is one plot on the west coast in St. Pete,FL and has no debt against it. It was put onto Ras books in 2009. I also have no idea what it is worth.
Ras just recently sold two little plots of Daytona land for a modest profit. Five left in Daytona to sell.
Ras now only lends against cash flowing properties, but these legacy assets look very odd on their books. Hopefully, they sell these assets so there is less to explain. Simple seems to be the way to go.
Irt is going down so much. Irt is probably more stable than before merger. Maybe a bit too much debt. Execution risk in place since they now need to sell a few properties in order to complete the first phase of changes they have announced.
Oh, and I read a company's financials BEFORE investing in it. Muck, you are unique, because you claim to understand how to read financial, but also claim that you don't bother reading them for any investment except for RAS.
Oh oh, I can't understand the 8K, please explain it to me.
Oh oh, I can't understand the 10K, please explain it to me.
Oh, I don't understand the relationship between the wholly owned subsidiaries listed in the financial. Please explain it to me.