If they are able to consistently get the types of increases they have claim they can over a couple of years from the point of each aquisition, IRT will be a home run.
Just why would they give you back cash that they worked so hard to raise? They can't go back to the market to raise more.......they have no credibility. Just a small cap, with no institutional ownership............no profits....no substantial growth.......just a BS story.........
RAS learned a good lesson during the 2008 & 2009 downturn. I learned it too by looking back at their financials from that time period. As bad as unemployment and the general economy got, the properties only experienced 10% not paying rent. Then RAS got to take back many many properties as owners were afraid and either didn't want to put cash in, or didn't have cash to put in. Multi family is a very safe predictable cash flow. IRT can get cheap fixed rate on one side, while pumping up the rents on the one year leases as they come due.....on the other side. There are also some economies of scale in owning a lot of units in one smallish city.
Simple formula....it is working and should continue to for some time.
If IRT actually uses the shelf offering to raise $1 billion in cash over the next couple of years and continues on doing the same type of leveraged buys .........65% debt and $35% equity.......IRT will have $2.8 billion in new assets......
Did you mean to say that the value of RAS's holdings in IRT will increase in value as the share price goes up? Certainly, the % of ownership doesn't go up as the share price increase. Only "special" management owns more by hanging out and getting more pie for share price appreciation.
Thanks for the post Davis.
While there is no reinvestment period, RAS can (after a certain date) prepay all of the notes and roll the existing assets into a new securitization. I can see this making sense if some of the loans repay and the securitization loses it's leverage, giving RAS a lower return on the cash invested.......this type of scenario is probably a couple of years away.
Maybe I'm missing something, but if day after day the majority of the trades are short, should the overall short position be growing dramatically.
I think it is highly likely, because they can and it shows steady progress, which they want to show.
I agree with your assessment .........missed opportunity......
Davis, you're typing too fast.
This post was about the $1Billion mixed shelf that IRT just did. Yes, RAS did one a few weeks back. Both companies have expectations of raising funds over the next few years.
IRT will need to raise more funds before RAS.......
Davis, I'm pulling this out from your write up.
How are they defining themselves and their competitors.
They compete with banks, REITs, mortgage REITs, insurance companies......you name it.
As lender they are financial intermediaries that specialize in real estate and they just happen to be structured as a REIT.
I really don't know what they were beating their chest about. They are a small specialty player.....
Well, RAS continues to hold a few hundred million in low quality Tabernas bonds. Most of those holdings were probably not purchases made during the downturn, but rather bonds they were unable to sell off. This is where they were probably misleading. If you keep 6% equity traunch, but there are $200 million of low or unrated bonds right next to them in the structure, how long does it take to recover your investment? A long long time.......Merrill Lynch suffered in a similar fashion, holding onto all types of low quality stuff on their balance sheet they were unable to sell.
In any case, we are talking about past history, and people no longer associated with RAS.
Yes, somewhat pleased. I can see this same thing happening again and again over the next three years. RAS has over 70 mez loans and RAS is in a good position to know and understand the properties as well as being in constant contact with the owners.
Well, it is probably technically accurate. The equity traunch was recovered .......all the non investment grade bonds that they were unable to sell.........well those things are still with the company and on the RAS balance sheet. Betsy, or Danny, was being clever with the wording...................