Friday, 10 February 2012 10:27

When A Fire Sale Burns Down The Building, Bankruptcy Is Inevitable!!! Featured

Foreclosures_highway_exitI have just posted "Scenario III : Sale of properties to fund debt repayment" for the latest forensic analysis REIT subject - Fire Sale Scenario Analysis. As stated in previous posts, this company is virtually a guaranteed bankruptcy. This piece is available to all paying subscribers. I urge all subscribers to download and review:

Recapitalization and individual property analysis will be posted within the next few days. With those research postings, I feel I've covered every practical angle this company could take to kick the can down the road and the resultant findings are the exact same as they were before the analysis - bankruptcy, or a simulacrum of such, is unavoidable!

The “fire sale” or distressed asset disposition scenario seems like the least possible, least likely and the least practical scenario. The reason is that the Company’s portfolio has either properties (1) which have negative valuation after considering debt due on them or (2) have properties that don’t have specific debt against them but are mortgaged under the revolving credit facility.

Please see the details on valuation of 27 properties we have valued in the aforelinked document. As illustrated, almost all properties with a positive valuation (see Column L) lack property-specific debt against them. But all of these properties have been encumbered under the revolving credit facility. The properties not covered under the revolving credit facility and having positive valuation after deduction of debt due on them are as listed in the analysis. The total positive value of these three properties is around USD 36 mn which is insufficient to meet net refinancing requirement of USD 295 mn as detailed in the document. Again, a hard landing is absolutely unavoidable at this point.

This will not be the only real estate company to meet such a fate, and I have made it very clear in many a past post, TV interview and presentation.

Reggie Middleton on CNBC's Fast Money Discussing Hopium in Real Estate

Reggie Middleton discusses the fall of commercial real estate in the US

  1. The Greatest Risk To Retail Commercial Real Estate Is? Sovereign Debt! Macro Headwinds! Popping Bubbles! Busted Banks! No, It's The Internet!
  2. The Conundrum of Commercial Real Estate Stocks: In a CRE "Near Depression", Why Are REIT Shares Still So High and Which Ones to Short?
  3. Reggie Middleton ON CNBC's Fast Money Discussing Hopium in Real Estate

Previous related posts on this company...

Watch The Evidence Of Global Real Estate Travails Mount As Subscribers Short This Stock

I Present To You The First Probable US Commercial Real Estate Insolvency Of Many To Come

The Real Estate Recession/Depression is Here, Eurocalypse StyleAn Overview of a US REIT Headed Towards Distress

The Greatest Risk To Retail Commercial Real Estate Is? Sovereign Debt! Macro Headwinds! Popping Bubbles! Busted Banks! No, It's The Internet!

Prepare For CRE Crash And Burn Marks At A Shopping Mall Near You

Last modified on Friday, 10 February 2012 11:24

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