Your investing sounds like fun. Unfortunately I don't have the total freedom to do it your way. I think with focus and discipline I could make money and have fun. One day:-)
Cramer is making too broad a statement. I'm sure that based on the standard attributes of REITs he is right on about 80% of them. I'm not arguing that RAS will do well if the FED cuts back on its loose money policy. I can see the conduit loan business slowing up. I can see the interest rates creep up and that means the semi fixed cash flow RAS is generating from its good securitizations will decrease in relative value.
Many REITs are, intentionally or not, making bets on the movement of interest rates. RAS has claimed to structure much of its business to be interest rate neutral. Of course it is not possible for a living breathing business to be perfectly neutral, as the overall economic landscape changes with the movement of the interest rates.
For one thing, I think you forgot to pay the bond holders.
Run through my real life numbers listed above for the most recent securitization. When fully lent out, RAS will NET $5.775 million annually from this deal. That is a 19.25% yield on the original $30 million of stockholder $ invested. $30/$5.775 is 5.19 years.
RAS puts 30 million into a securitization of 130 million total. RAS makes a spread of say 375 bp on the 100 million and a full amount on the 30 million. Lets call that 675 bp.
So, doing the math, RAS will net $5,775,000 from the securitization on an annual basis. Which is a very healthy return of 19.25%....on the original 30 million put in.
However, your post inaccurately postulates that RAS will get all of its money back in just 18 months.
Bad math, or bad logic............you choose.
Oh, RAS might have had the relationship as a second mortgage lender.
I think most of the delinquent loans are mez based on the average interest rate that they are (not) paying. RAS still has about $275 million in mez. These could easily lead to owning more properties.
Anything is possible, but a 98% occupancy would imply a healthy property that should have been able to service whatever debt load was placed upon it. I guess they could have borrowed heavily to fix it up, but were unable to raise the rents enough to refinance the full debt load.
Oh, I thought the board had determined that the property bought by IRT was not a RAS property. Maybe I'm mistaken.
The 10Q lists $ amounts for all past due loans. In the footnotes of the financials. The total amount past due is about $50 million, but being past due it bad but could be caused by a number of things.
The number I have listed is the actual number with the naming from the CPAs.......
No big deal, just interesting. RAS will own more properties going forward unless they decide to sell the defaulted loan prior to completing the foreclosure.
Since interest rates remain relatively stable throughout this manufactured crisis, I wonder if the borrowers are rushing to refinance long term commercial loans fixed rate as everyone is a bit concerned about the future.
Are the loans closing faster than ever? Looking forward to the CC and a hint or two......
I wonder what we will own next.
I wonder why RAS doesn't put a DRIP in place for itself and maybe for IRT too.
I just noticed that RSO is raising significant money through their DRIP. Now, with an increasing dividend it would seem to make a good deal of sense to sell more shares on a steady basis to existing believers.
The notes are senior to the pfds. They are unsecured obligations of the company. They might one day become junior to the pfds, but only if the holders choose to make it happen because the RSO stock price has moved so high that the bond holder comes out ahead.
Alf, if you followed RAS over the past five years you can see that converts can be dangerous.
Don, I'm not denying the abuses (IRS, if you are reading this, I'm not point ing a finger either, I am but a humble servant, step back, step back, bow) but who does the IRS report to? I don't think it is the executive branch.