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If the company fire sales properties that are underwater, it doesn't solve the problem. If it fire sales properties above water, and successfully clears the liens on the property, then it pushes the company into valuation band that I suggested. Remember, the share price of the REIT reflects the equity of the properties (asset value less incumbrances) + the present value of future cash flows.

If you sell off any property, whether above water of below, you eliminate the prospect of those future cash flows hence must remove that from your valuation. If you sell off properties below water, you are still on the hook for the balance of the liens and encumbrances.

If you sell properties above water but at a discount (ex. firesale) the amount of the discount gets sliced directly off the top of your equity value (ex. share price).

As I have said in the report, we have been through this scenario before, and it didn't work out well with GGP. In addition, at least in my opinion, GGP has much more marketable properties than this REIT. Look at the graphs of correlation that I have supplied in reference to GDP. We can be relatively certain where enrollment cash flows are going to go, even if one were to be optimistic and assume that we will have explosively expansive GDP next year. Knowing the relationship between GDP and this company's revenues, would [b]YOU[/b] loan it money if you had access to the Fed's cheap money loans, or would you go for a better risk reward ratio?

As for investing in the debt, I would prefer buying puts on the equity. You get greater leverage to the upside while having a limit to the downside. The stock is at 605+ of its all time high which was achieved during the end of the property bubble. I don't foresee a 2x to 4x pop in this stock at all.

@ ND Badger
I am sure our government is on the case in reigning in the financial firms. I don't know if I more pessimistic, or just more realistic, but mostly what I see is Wall Street and banks catching hell from our politicians and bearaucrats as of late:

Some of the same banks that got government-funded payouts to settle contracts with American International Group Inc. also turned to the insurer for help cutting their income taxes in the U.S. and Europe, according to court records and people familiar with the business.

The Internal Revenue Service is challenging some of the tax deals structured by AIG Financial Products Corp., the same unit of the New York company that has caused political ire over $165 million in employee bonuses.

The company paid $61 million last year in disputed taxes stemming from the deals but sued the U.S. government last month in federal court in New York, seeking a refund, according to filings in the case.

Banks that worked with AIG on tax deals include Crédit Agricole SA of France, Bank of Ireland and Bank of America Corp., according to AIG's lawsuit. The banks declined to comment.

In general, AIG's tax deals permitted U.S. companies and foreign banks to effectively claim credit in their home country for a single tax payment, partly through the use of an offshore AIG subsidiary. In its lawsuit against the government, the insurer said it was told by the IRS that AIG hadn't shown that the transactions "had sufficient economic substance and business purpose" to justify tax benefits. The IRS declined to comment.

The tax-structuring operation started by AIG in the 1990s was even bigger than AIG's credit-default-swaps business, according to a person familiar with the matter.

An AIG spokesman declined to discuss the tax-cutting transactions in detail but asserted that the tax benefits were proper and justified. AIG wants to "ensure that it is not required to pay more than its fair share of taxes," a company spokeswoman said.

How do you figure this? How much have the previous Gov plans done to help the CRE market? The actual physical RE will be the hardest thing to move due to oversupply, weakened demand due to a downturn in the macro cycle, and illiquidity due to transaction times and friction. You can fake and manipulate values in financial assets for some time, real estate is a totally different animal. I will post some recent NY real estate happenings soon.

I have put my team onto analyzing the geithner plan as well as the FDIC plan (which is getting a lot less press) and will have some objective info to report soon. As for this particular REIT, think long and hard about whether any news you have hear over the last 24 hours will really do anything to positively effect their perdicament.