It lets them make fast acquisitions when everything is right. They could quickly run out of quick cash for investing if they keep up their current pace.
wow. ONLY 2.5 garden style apartment complexes in the garden state. I wonder why they call it the garden state if it only has 2.5:-)
Thanks for sharing your deep thoughts and research!
I wonder how many of these types of complexes are available out there and who IRT will be buying them from. If there are a large number that are owned by either individual real estate guys that want to cash out, or smallish partnerships, maybe IRT could do a massive roll up of a fragmented market. Certainly RAS would know know to get reasonably priced long term financing and Jupiter can run the properties.
Does anyone know if there are other publicly traded REITs that specialize in this type of property? There seems to be every variety of REIT imaginable out there.
Our old VP says I shouldn't invest in carbon:-)
Maybe I will invest in a cable channel and sell it to Mid-east investors that have a message to bring to the west..................
IRT is buying $65 million worth of apartments in one market.....Oklahoma City.
It's possible that IRT will have doubled in size in just its first 6 months as a public company.
All properties had very high occupancy leaving modest upside potential other than raising rents.
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......