Dane Bowler
Value, hedge fund analyst, REITs, long/short equity

RAIT Financial's Asset Management Capabilities Could Unlock Material Value

The Buy Thesis

RAIT Financial's (NYSE:RAS) asset management branch is attributed almost no value by the market as its current earnings are so small. However, RAIT's relationship with Independence Realty Trust (NYSEMKT:IRT) could substantially grow these earnings and add as much as ~$2.55/share to RAS. Given the current market price around $8.20, this represents ~30% upside.

RAIT Financial has been the largest beneficiary of IRT's recent performance and the market has failed to recognize it. This can best be illustrated through a chart.

(click to enlarge)

Thus far in 2014, RAS has dropped 7.5% while IRT has gained more than 20%. Why would investors in RAIT Financial care about a multifamily REIT? Well, RAIT owns 6,969,719...

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