Crystal River Capital: Deleveraging to Wait Out the Storm 13 comments
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The first half of 2008 has certainly not been kind to financials in general and Specialty mREITS in particular. However, a number of these Specialty REITs have been changing their focus and business paradigm to match these tough times.
One of these Specialty REITs is Crystal River Capital (CRZ). The company has refocused itself around some basic tenets:
- Leverage the expertise of its affiliate Brookfield Asset Management to focus on commercial real estate;
- Match fund almost of all their income generating assets to eliminate the risk of margin calls and forced liquidation of assets in a firesale;
- Directly owning huge rental properties and triple-net assets similar to its Houston, TX, Arlinton, TX and Phoenix, AZ campuses, where captive tenants such as JP Morgan can provide predictable cash flows in long term leases.
With these goals in mind, the company announced a strategic shift in April 2008 that resulted in the following (see April 2008 8K (Q108 update)):
- Sold off its $1.2B Agency MBS portfolio to reduce repurchase, margin debt to approximately $28M;
- Raised approximately $45M of net cash;
- Freed up $52M on its funding line;
- Made available approximately $100M of unencumbered assets.
It would appear that with close to $200M of liquidity and only $28M of short term debt, CRZ has the wherewithal to wait out these difficult credit market conditions.
The company recently declared a 30 cent dividend, a 30% yield at current prices, and noted in its May 2008 earnings call that it remaining assets can generate roughly 30 cents per quarter in REIT taxable going forward.
The key question regarding CRZ is whether the market has thrown the baby out with the bathwater or if it will struggle to realign its strategy with the difficult credit markets.
Disclosure: Author holds a long position in CRZ
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This article has 13 comments:
And here he advising a purchase of NovaStar, a company that soon after went bankrupt:
www.investorvillage.co...
Here he is saying on a board for AFN that "MARK TO MARKET LOSSES BEING EXAGGERATED"
Maybe you should buy then? Oops, maybe not, the stock fell 60% since March 2008 when he posted this.
www.investorvillage.co...
Sure the numbers are wrong, at least 2 of them are since the company provided updates yesterday on the unused credit facility and callable repo debt. As of July 7, the unused line is $70M (higher than the $52M reported in the article) and the repo balance is $22M (lower than the $28M reported in the article). Of course, this rebuttal wasn't about numbers and I think you know that. The anchor of the article was the April 8K, and all I was doing was something you didn't alert your readers to. It appears that since the credit line was higher and repo debt lower, the company may have used some of the $45M cash reported in April to pay down one or both. I agree yesterday's PR didn't address the current cash balance and unencumbered assets compared to the numbers reported above.
Indeed, the crux of my complaint with you is not what you said, but what you DIDN'T say. You made some assumptions about CMBS performance, credit metrics and the like. We will not know whether you are right or wrong until the company reports. My complaint was that used the "Bankruptcy" meme in your headline, obviously to get a desired effect, without alerting your readers the company had made some moves a few weeks earlier to avert the cataclysmic scenario essential guaranteed would occur.
Next time I suggest you TRUST YOUR READERS. Tell them EVERYTHING and let them decide. Give them ALL the data points and let them make up their own minds.
Peace out.
investorvillage.co...&...;
Now you're starting to flail about like a small child. Just where in that Novastar post from 2 years ago did I advise buying Novastar???. You are flat out LYING. The post clearly states that a number of posters were asking me for my best guess on Novastar 3Q2006 GAAP and Taxable Income. I provided a detailed response.
I note you didn't post the ACTUAL RESULTS versus my estimate which I followed up with a post a few days later:
www.investorvillage.co...
That seems to be your pattern. Only provide PART of the story. Why didn't you link to my follow up post days later?
And what does your link prove other than the sector has been hammered siince early with many financial companies down 50% - 80% since then. Go research what JRT, ABR, NCT, AMC, C, BAC, LEH, MCGC, ALD, etc. etc etc and you will see they have all suffered the same fate or worse than AFN.
Finally, posters who follow me on Yahoo know that RAS and RSO are my biggest holdings that I picked up in the $5s & $6s respectively. I'm way up on my 2 largest holdings. Since you have so much time on your hands to spend all day on GOOG, how about spending that valuable time and locating the posts where I recommended RAS at $5+ and RSO at $6+.
Peace off.
Even if someone lost money on 100 stocks in a row, that would have no bearing on the facts posted or the quality of the analysis offered.
Are such ad hominem attacks an example of stock manipulation?
I do not know what else one would call it.
Even though I don't have a dog in this fight, I am less than impressed with Greg Weston's responses. You sound like a spoiled rich kid who can't take any form of criticism. Maybe you are both right and maybe you are both wrong, but jesus, don't just pout in the comments.
I'm sure they would. And also accuse you of -naked don'ting.-
files.shareholder.com/...