Irt will go on a refinancing party.............let's see if Ras management was working on lining all of these loans up while waiting for the merger to close.
Ras will close tons of conduit loans.
Bridge borrowers will continue to have cheap money and feel ok about having variable cost money outstanding.
The fed helped these two companies out tremendously today.
Unless Ras finds a way to issue more debt, or becomes better at utilizing the finite capital pool that it has available.
They have done a few things to create/recycle capital. They have now sold a few multi family properties. They have sold some second mortgages that were not within their securitizations, they will liquidate FL-1 and recapture the excess that is within that securitization.
Certainly the preferred issue is "safer"and still pays a high dividend.
Irt does seem like a good bet. Very simple easy to understand business for everyone.
Thanks for your post on the other thread.
I wouldn't bet on an increase only because based on past experience, having followed Ras for a few years now, I feel they want to paint a picture of stability, and part of that is to never go backwards by lowering the dividend. 18 cents is a high % payout based on "predictable, recurring CAD." One time events like property sales are fine for strategic reasons, but like the lumpy conduit business, it is not guaranteed to repeate. Plus, Ras is getting zero respect with an 18 cent dividend, it will not necessarily get any extra for a 19 cent dividend. If they continue to perform quarter after quarter, the share price will improve and there will be room to grow the dividend.
I guess I would say something should give. It would be strange for a 14% yield to remain for a year or more.....so either the stock moves up, or the dividend moves down. It's not the law, but it is unlikely to stand as is. If Ras continues to mend itself and slowly throw off more CAD/FFO then the dividend will likely stand and the stock price will eventually rise as people believe that the dividend is predictable and likely. If Ras slips up on its path to mend itself, it will either cut the dividend, or if not, shareholders will read the dividend as unlikely to continue in the same way and sell.......which is a bit where we are.
People probably found it disconcerting when they saw book equity drop when Tabernas was eliminated. People probably found the SEC settlement disconcerting because previously it was just a footnote in the financial. Both those things were a long time coming and probably should not have been complete surprises to those following closely. Ras is at an interesting spot right now. Strong demand for loans in the market. Real estate in general is stable with the low interest rates. If it doesn't perform, it is a loser and will be treated as such. They predicted $1billion in new loans.as of 6 months we are only at a bit over $400 million. They need to get moving.
Davis, can you list the 6 or 7 potential uses for the $40 million for us. I agree that my suggestion of spending it all on the retail space improvements is not the most likely...........although they are doing some of that.
According to the 10K, page 169, the property had an $11.5 million mortage(s) on it.
So, presumably they are booking a $6 million profit after about 5 years of ownership. Wonder what the CAP rate was.
Four C Malls.
With one-half of one % funding, Ras can carry these low quality malls and is likely to be cash flow +, but it must fix them, which we heard that they are doing to the one property and it is certainly good that Urban is now running all four properties as of January 2015.
Ed, the Daytona debt is owed to a securitization that Ras no longer owns, so if it is true ly underwater Ras could reject the property as the loans are non-recourse. So, I suspect that they are probably, at a minimum, a bit in the money especially when one sees the year Ras took it over. It was a head I win tails you lose deal since Ras took the property and the Securitization just provided 100% funding.
On the Gulf coast side Ras owns another development plot that is on the books for $20 million+ and it is unencumbered.
I think debt service is nominal. Whatever money is owed is owed to Rait 1 or 2 and probably paying interest only at maybe one half percent. Still, there is principal owed. One can figure out many of the pieces from the end of the 10K which provides details on properties owned and debts owed on the specific properties. I believe that the 4 malls were on the books for about $100 million, which was likely the value of the original loans. It's really nothing to worry about, but Ras will need to fix these malls, or significantly reposition them. The new lending on bridge loans is roughly 70% multi family and 30% office. Ras is 25% vacant on office too. Probably 10%-20% would be normal, but these were all foreclosed on too, and require tlc.
As one should, Ras focused on the low hanging fruit.......multi family and turned those lemons into lemaide! Now can they do the same with some mall properties and some offices?
Ras didn't buy Urban. That was yet another "foreclosure" as Ras owned some sort of preferred shares and was able to take over because of underperformance. They never disclosed how much money was originally invested.
Also, Urban owns no real estate. It manages about 50 or 60 malls and other retail box spaces. It might be possible for Urban to help Ras with their poorly performing retail properties. Depends how flawed there properties really are. Below GTW999 mentions how these types of properties have been repositioned lately into other uses. Typically, they are close to heavily traveled roads, have ample parking and with their zoning, are unique.
Four malls were foreclosed on representing 1.4 million feet. Two properties were bought on the open market last year. Those two had 95%+ occupancy.
It is possible the the cash flow is + from these malls, but who wants to go to any mall that is missing many stores? It diminishes from the experience and in the long term is a death knell for the property. Ras told us they were fixing up the one mall, they need to find fixes for all of them. There are no buyers for this type of property. Ras is a long term owner, and must invest in them if there is any long term viability based on local demographics etc etc
So far, Ras has not been able to turn its retail property lemons into lemonade as it was able to with the multi family lemons.
I set him off with my response in the thread....Once again DF.........
He started off with why did they need to raise money when they already had $265 million. I explained that the number was a consolidated lump sum of many discrete piles of cash.
Just because I point out that you can't read and understand consolidated financial statements does not mean that I should be lumped with Davis. He probably disagrees with you too, but I don't speak for him, or with him. He posts his own posts.
Read my previous post. Ask a CPA friends m a reputable firm, that works with corporate financial statements or an accounting professor to explain it to you before you post further.
Just playing, but Ras owns 1.7 million of retail space with 26% vacancy rate. Urban retail, a major retail space management company is 100% owned by Ras. They did disclose that they were investing in one of the 4 malls that they foreclosed on. Hey, if all it took to get 442,000 square feet rented ou was investing a bit of cash, I'm all for it.
In general, I happen to think retail real estate stinks. Nonetheless, the right tenant and the right location and the real estate could be great.
And be accretive ?
How about this.............Urban found tenants for the vacant retail space and it is costing $100 per foot for the leaseholds to get the new tenants to sign.
$265 million in cash?
The word you need to add to your vocabulary is consolidated.
The cash you are looking at included Irt cash, cash collected within the securitizations and due to bond holders, cash that was restricted for other reasons.
Consolidated.........look it up.
I too did not anticipate an offering of common, even though I knew $265 million was something different than Muck understood it to be.