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  • Are the 'Sharks' Waking Up? [View article]
    What other sub-$1 CMBS REITS do you like?


    On Mar 12 05:55 PM User 375446 wrote:

    > Let's take a look at AHR (Anthracite Capital), an REIT containing
    > primarily CMBS. I am a senior executive in the structured finance
    > area of a large investment bank, and I can tell you that CMBS spreads
    > are so wide right now that every securitized commercial real estate
    > loan would have to default, followed by a 50% average principal loss,
    > in order to support bond pricing as it stands today. In reality,
    > less than 1% of securitized commercial real estate loans are currently
    > over 60 days delinquent, and only a fraction of those will sustain
    > a loss. Yes, things could get a little worse before they get better,
    > but what is the absolute worst-case loss scenario? Our experts say
    > 3.5%. So why do CMBS bond prices reflect 50%? Because, in the absence
    > of tangible information, people run to safety no matter how invalid
    > the underlying fundamentals may be, and prices eventually just don't
    > make any sense anymore.
    >
    > The same thing is true for AHR. This is not a business that may have
    > to "close its doors" because sales have fallen. This is an REIT with
    > a portfolio of income-producing assets that are simply impossible
    > to value at this time, so in the absence of tangible information,
    > people have sold the stock to absurd levels. However, once the credit
    > markets free-up and the values of commercial real estate stabilize
    > - whenever and at whatever levels that may be - it will once again
    > be possible to peg values of CMBS, including those in AHR's portfolio,
    > and the stock will rise substantially. It is inevitable. The only
    > question is when.
    >
    > If purchased at the current price of roughly $0.50 per share, it
    > is hard to imagine a return of less than 10x within the next 18 to
    > 24 months. Just be patient. The value and income are there. It just
    > needs to be re-discovered.
    >
    > For those who don't buy AHR today, put a reminder on your calendar
    > exactly one year from now and see what happened. We have never seen
    > a market like this in our lifetime, and it is presenting us with
    > some unprecedented opportunities.
    Mar 12 20:43 pm |Rating: 0 0 |Link to Comment
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