interesting thoughtsI can see that the loan portfolio that cost...

interesting thoughts

I can see that the loan portfolio that cost 300m euros or something like that would be now difficult to sell on and hence perhaps this is distracting from the assets, ie perhaps a writedown of an asset

however ....

all the loans are relative to the Eurobor or Libor

ie Eurobor + 2.5%, Libor + 3% etc etc in their returns

hence if there is an increase in Eurobor or Libor then it does not matter... in fact on reading their report they would actually benefit.

and vice versa I guess if the Libor and Eurobor drop then the returns may well decrease, but in these credit environments I think and upside to Libor/Eurobor is more likely, even if the ECB does drop rates (ECB dropping rates unlikely given the inflation currently upper end of ECB range for these major countries)


I guess where there may be a huge problem, is if the Eurobor and Libor goes up dramatically and this leads to defaults...... in this case with the last dollar being at 83% current value, then the write down of the property value would have to be greater than 17% before REU loses any money.... and even consider REU could purchase the assets if nothing else at 83% of valuation and hold for a while till market stabilises. If they can secure funding that is.....


I have been thinking that a reason for the down turn in price was that just at the time of equity raising at the begining of the year there was that Chinese stockmarket crash, that left the share price on market less than the new shares and hence the underwriters got nailed with heaps and heaps of shares that they just did not want....

now if the underwriters finance source has increased in percentge or dried up and they are required to repay, then the underwriters would be in a position that they just had to keep dumping the stock to repay their debts

.... having said that, why sell now with a yield of 13-14%, surely this would cover the interest on borrowing


anyway

I can see how funds are really pissed off because they thought they were purchasing a property trust and bang it is has become a CMBS company. And hence the funds would probably been keen to ditch the company.... but at these prices???

I can see that the underwriters are really pissed off too because what they underwrote for $1.03 release the company is now buying back for ?73c - 78c. This will benefit REU to the tune of 50m x 30c ie about $15m

Anyhow

as long as all the market releases correctly outline the companys position, I think it is a good hold/buy



ijudge