ACapitalist

Mr. Market Trips on Mark to Market, Gives REITs Away

I agree. I have only looked at Newcastle in detail but in Newcastle's case, they only have 16% of their debt in recourse warehouse lines, still have $200 mil of unencumberd assets and $120 mil in cash to meet any further margin calls. They have sold down assets to raise cash. My analysis shows that they will have to cut their dividend this month because their cash flow has been reduced by 10%, at the most 20%. But with paying over a 30% dividend to the current market of $8.50, a cut of the dividend from 72c to 50c or 60c will be seen as positive. In the last earnings confernce call less than two weeks ago, they gave no indication that they would have to eliminate the dividend.