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Newcastle, RAIT Financial: The Long Case for REITs

Fair Value adjustments for liabilities is an improvement that will soon be required of all U.S. companies the way it is for foreign companies today. FASB will soon require it. Migration has been underway since 2002.

The application of Fair Value does not imply any need to repurchase the liabilities. It does however give a much better current value of the company when comparing asset values that are required to be marked to market value.

The NCT $1.3bn from the sale of assets was used to pay down liabilities. The liabilities were not paid off at face value. The liabilities were paid off at market value.

REITs: Still Some Bargains Out There

Greg Sukenik does not even need to attend RAIT Earnings Call to get his data. The only Earnings Call that I could see that he has ever attended is IRETS call at the end of February. From the Q&A at the IRETS meeting, it did not seem like he had read the hand out material. IRETS has traded between $9.00 and $11.00 for the last 5 years and is yields 6.5%. I would be curious why he chose this company of all companies having conference calls. It may explain why there are so many errors in his reports.

REITs: Still Some Bargains Out There

This article is Greg Sukenik interviewing Greg Sukenik. The fact that Greg Sukenik was the author of his own interview makes everything in this posting suspect.

The Zacks ratings Greg published in March for RAS said he expected RAS to earn $1.30 for 2008. This means he expected they will be paying 90% of the $1.30 or $1.17 this year in dividends. At the current RAS $7.50 price, that is a dividend yield of 15.6% for the year. The $5.00 2008 target he set for RAS would imply a dividend yield of 23.4%.If RAS performs like CEO David Cohen has said several times, RAS would continue the dividend at $1.84. At $1.84, the dividend yield for a $7.50 stock price would be 23% and at your $5.00 target would be 36%.

If RAS makes the $214M in fees Cohen estimated, the dividend would be higher than the $1.84.

If management numbers were met, buyers today would get a 23% return. If your much worse forecast happens, then the 15% dividend yield seems like a pretty good for the 6 months.

Greg also forgot to add a stock position disclosure to the end of the interview.