Oh. So the rally was to support some form of immigration reform. You said that the parks were open for illegal aliens. I guess the participants in the rally could very well be law abiding US citizens taking advantage of their constitutional right to free speech and and right to assemble.
Assuming that there were participants to be arrested, who would do the arresting detaining, or turning back? I imagine that the park police or park rangers are not working just like many other government workers.
Yes, it's a backstop buyer. This is essential if the company wants to "TRY" to be fair to the existing shareholders (or at least appear to be) and must know with some certainty that they will actually raise the amount of money needed.
I'm not sure that a backstop would be needed with a REIT. Maybe they offer a unique class of security just to the common stockholders that clearly is being sold at a big discount to market value. If the common stockholder doesn't take advantage, they lose out.
Thanks, I appreciate it. I'm just testing out my thoughts.
As a long, I'm happy if RAS just makes steady good money from lending, but I really want to make sure I'm not inadvertently owning assets that can't reprice significantly if inflation comes. Some assets will be able to reprice, others will not.
Yes, the world economy is a mess. Excess capacity abounds. No traction anywhere. The Fed is playing out theoretical games in real life and hoping they work. I remember not so long ago a hedge fund (Long-Term Capital) run by Nobel Laureates playing out their theories in the real life markets. Real life didn't play out the same way that the smart guys modeled. Scary stuff.
I'm not sure that one can isolate just one input of the equation. Certainly you are right that labor demand is so weak it doesn't feel it can ask for increases. Or, it can ask, but it can not get the increases requested or demanded.
Inflation is the whole fear of this super loose money policy. Currently the velocity of the money is very low, at some point if the velocity picks up the prices of things will increase. Possibly at a rapid rate. Assets for sale or lease that are capable of repricing upwards will benefit. Assets that have a very set price like fixed rate bonds will lose value rapidly. The earning power of ras's securitizations will be set and therefore be similar to fixed rate bonds. Some of the other assets like the real property will be able to reprice upwards. The assets in the new securitization might behave in an interesting way. The loans against the properties are floating rate as are the liabilities, thus, there is an established spread, but all of the properties being financed are in transition and probably don't have sufficient cash flow to pay back a loan with a rapidly increasing rate of interest. Further the loans are due in only a couple of years. They must refinance at the due date. If they can't find a take out loan, they will either need to cough up cash to make the LTV work , or they will need to hand over the keys.
I'm proposing that if we experience some rapid inflation RAS would hurt a bit from earning the "expected amounts" from Rait 1&2 and do better with their real properties, but also, become a much bigger real property owner when the transitional properties being financed are unable to adjust fast enough to the changing circumstances.
Someone recently said..............."no one is really sure when inflation is coming but I think everyone thinks it is coming."
What will happen to the new securitization if interest rates move up dramatically? Will RAS suddenly own more property?
I guess what I meant to say was one's perception of dilution is colored by when they bought their shares. I bought my shares at prices lower than the prices of the secondaries and therefore I was happy the company was able to raise capital that is accretive to earnings at "high" prices. "High prices" are a relative thing too.
If one bought their shares in early 2007 and held on, one is probably not the happiest:-)
The original convert notes totaled $450 million. They were able to eliminate $350 million though debt for equity exchanges, buybacks at big discounts etc.
They have issued about $125 million in new common equity in the past 18 months.
So, the debt elimination plus the new equity issue = about today's market cap.
I look at this as amazing work on "NEW" management's part to find a way to move forward.
RAS is a phoenix in the best sense imaginable.
Book value is convoluted. They carry the Taberna at cost, which overvalues it significantly. At the same time, they carry all of the Real property they own at acquisition cost, which probably significantly understates its value. Further, the Tranches of RAIT 1&2 that they bought back at big discounts are carried at what price?
I didn't know that there was enough available information to know that it was a good deal. We know what they paid, we know they have 98% occupancy. I assume they got it at a reasonable price relative to cash flow, but how do we know? Did I miss a bit of info?
I'm not sure what either post on this thread has to do with the excess cash sitting at IRT (the subject of this thread)...............but at least we are talking about RAS.
Since it is a sin for a REIT to have significant idle funds, I wonder what IRT is doing with its $33 million in cash. $3 million went back to RAS buying back some prfd shares. The property they bought could have been done with 100% cash for now, so that a nice chunk of cash it at work. Still that leaves almost $20 million idle. Can they lend it to their parent company, RAS? They obviously should do that so they get some type of return.
Oh, I know all about Trust Prfds.
I bought LARGE amounts of AFN putable convert bonds at big discounts when the shyte hit the fan. AFN lost all their $ on the CDOs they created. Fortunately, they had hedged their mortgage CMOs and collected about $75 million when everything went south. I collected 100 cents on the $ when I put the bonds back to the company.
Trust Prfds are low on the totem pole, but are not totally terrible. The borrower can defer payments, but only for 5 years. Because they are unsecured obligations the company must stay in business for there to be any hope. RAS has done little to give us a clear picture of the Tabernas. If they wanted to make it clearer, they would give us a breakdown of the how much is totally uncollectible, vs. defferals. I have never seen that.
I think the only way to deconsolidate at this point would be to sell or give away the equity portion of the CLOs. This would not be hard to do, but would relinquish control. RAS could still be in charge of servicing even if they are no longer the owners of the equity portion.
They don't want to relinquish control, because there are multiple positive outcomes if they remain in the driver's seat. Time will tell.
The Tabernas COULD be worth quite a bit if the loans continue to pay. If RAS were to get a hold of the last tranches cheaply and cancel them they could make the ratios repair quickly. Presumably they own much of the lowest tranches already, but not all. The interest currently generated from the loans (about 3% as of today) currently far exceeds the interest due on the bonds (currently about 1%). The problem is that the loans (collateral) total about $800 million, while the bonds outstanding are about $900 million. Still, if memory serves me, RAS owns between 300 and 400 million of those bonds.
In any case, as of today it is prudent to discount Tabernas 100% and consider it a lottery ticket that has reasonable odds of actually paying out.