Assuming they cooked anything bad (expenses) into the closing of the merger, Q4 should look very good for Irt.
I'm wondering if Irt will be able to refi some of the Tsre properties with the 10 year going lower and lower. Ignoring the $100 million acquisition loan, the other loan appears to be only a three year floating rate loan that could be extended. The rates on the loan are low, but why not lock in a low ten year fixed rate with a thirty year amortization?
The point of buying back some stock is not just to pump up the stock price as you suggest. The point is that it is a reasonable investment at this point. Just like when Ras retired recourse debt at meaningful discounts when it was in trouble 7or 8 yeas ago. it was a wise thing to do.
Scott will never hand over the ship. He's only 50ish and very proud.
What you're talking about happens to companies with zero options or CEOs that are ready to retire and want to get the golden parachute.
Excellent point for many/most companies though.
So you're mad, just like SME that the company isn't paying out the max that it could?
For the moment, the company is painted into a corner. While it has no meaningful recourse debt due for another two and a half years, it also has no reasonably priced capital available to raise in the open market. As Rait 1&2 loans get repaid, the leverage goes down as does the return. Ras management feels the best course of action is to keep making loans and in order to do that it must sell some real estate and retain some of your earnings. At this point, I disagree with management. With the common shares priced so low, it only makes sense to buy some back and get a permanent return of 15%++++++. It might only be able to buy back $10 to $15 million worth before share price starts to get out of reach, but the return on that money is permanent. Loans made and securitized will be repaid and therefore are not permanent. The return starts out high at 16 to 19%, but As loans repay, the return declines. Grab some permanent returns now and make good money for doing nothing.
As the share price rises, Ras can stop the repurchases and go back to lending, or start to retire some of the debt coming due in the near term.
Being hellbent on lending is not smart policy. I do understand that they can't stop lending completely and must stay in the game because eventually things will be back to normal and lending is ras's main business. But, just as Scott stopped chasing second mortgage business, it is wise to change gears at this juncture. Davis, please pass this post onto senior management. It's one of my better posts in the recent past.
Indeed. The problem is that the Tabernas still smell up the room.
The Tabernas losses are embedded in the 2014 numbers every quarter, and even into the first quarter of 2015. That also messes up the year to year comparisons.
I suggest that you look up how Ras calculates CAD (possibly a bit different than others). Check out Investopia's definition. Then, check out ras's definition.
Ras defines CAD on page 14 of its March 2015 investor Presentation.
Ras has regularly done a variety of things to net out the Tabernas, including making an adjusted book value that for a while made a lower book value than GAAP (because the Tabernas had significant GAAP book value) but dubious economic value to Ras. FFO would make Ras look like a disaster in2013 & 2014. Now, why they changed from AFFO to CAD rather than continuing to use AFFO is a good question for you to ask Davis. I frankly can't remember, but I'm sure cad made Ras look better that AFFO in 2015..........something different in how the measure is constructed.
I must correct my statement, the short position has recently increased a bit. As of the first two weeks of January it went up by about $2 million. Lots of volatility. Tiptree bought, while others shorted and provided them with cheaper shares.
Sorry, your dividend is history.......for now.
While Ras is doing new lending, Rait 1& 2, which have been very successful, are being repaid. As the leverage decreases, so does the profitability. Davis has mentioned this, but he softpeddles it because this is bad news for Ras. This is why Ras is not going to grow cad too much this year (barring major profitable property sales).
SME, you can't talk about the real estate being a good thing, while saying the lending is a bad thing. A good chunk of the properties are funded with Rait 1 & 2 loans.
Short position has actually decreased.
Yes, some got out, while others got it. Price fell😀. These things can happen.
I think Dr. Hugh is laughfing at you because there is no tax on REITs, so prefered dividends are treated the same as common dividends, or interest on debt. No tax a a REIT, so funding the portfolio can be done in any which way that makes the most sense for raising the funds. At the moment, there is no way at all that make good sense to raise capital, which is why Ras is in "recycling" mode. Major switch in the markets that has thrown everyone for a loop. The 7% convertible holders will be interesting come April. Either they take their cash and walk away, or they get to hold their 7% bonds for some time. Next put option will be five years down the road.
History my friend.
Ras owns it's real estate portfolio mostly thanks to forclosing on 50 to 60 borrowers that had taken loans from Rait 1& 2........two securitizations that continue to exist.
The loans happened first, then Ras got to own the real estate when the borrowers got fearful and/or ran out of cash and defaulted on the loans.
The securitized loans portfolio worked like a charm........well, it worked anyway.
The thing that didn't work well was having Daniel Cohen running the show and the merger with Danny's Tabernas.
Since decreases in oil & gas should give consumers more money to spend, will Ras/Irt be able to raise rents more than they otherwise would?
I wonder when the majority of leases come up for renual?
If the landlord pays for the heat for the majority of these properties, operating costs should decline somewhat.
On the other hand, some properties are owned in TX & OK and the slide in oil could hurt those particular properties.
I don't really think negative rates are heading our way. Low rates are likely to continue for quite a few years.
The Fed wants to raise rates and has made one small change. They have jawboned endlessly. The economists say there are two other goals: GDP growth and 2% inflation. Well, the growth isn't there. Inflation isn't there yet either. And as you now point out, we really are having currency wars.
Certainly these low rate are likely to help RAS, as they can sell some properties at better prices than they might otherwise. Also, Ras will likely be able to refinance the properties they want to hold onto while not needing to pump cash into them to qualify for a nice low ten year fixed rate loan. The low rates also make bad loans good (second mortgages will pay off rather than default).
To get a quick view, go to the Ras website. There is a map of all properties. If I remember correctly, most are in markets that IRT is not in. FL, AZ, CA,
My post wasn't directed at you. There have been many posts over the past few months suggesting CAD is a made up thing. Scott created it etc etc. it measures nothing. All REITs use FFO!!!!!!
there are many flavor of REITs. Few are like Ras.
It's a measuring stick that some might like, others might hate.
Is is not a RAS invention.
I'm not arguing that investors should choose to look at CAD over FFO or AFFO or GAAP. Investors should look at whatever measuring stick they like. However, the cad measuring stick existed long before Ras started using it. And, yes, management will write headlines to press releases and use measuring sticks that will highlight things that make their company look the best it can look. How surprising