RAIT Financial Trust Sells Asset - Analyst Blog

RAIT Financial Trust (RAS), a real estate investment trust (REIT), has recently sold a 167-unit apartment community in Colorado for $12.95 million at a profit of approximately $1.0 million after payment of associated costs and underlying debt. The asset sale was part of the long-term strategy of the company to increase funds for re-investment through commercial real estate securitizations.

RAIT Financial Trust originally held the first mortgage and mezzanine loan on the Class-B garden-style apartment community. However, with plummeting revenues from the property due to the economic downturn, the company decided to take full control of the asset and converted its loan position into direct ownership in February 2009.

This in turn resulted in an increase in occupancy and net operating income of the property. In February 2010, RAIT Financial Trust refinanced the asset with Freddie Mac (FMCC), and it was classified as a held-for-sale property on September 30, 2010. 

RAIT Financial Trust manages and invests in a portfolio of real estate related assets and provides a comprehensive set of debt financing options to the real estate industry. The company recognizes interest income from investments in commercial mortgages, mezzanine loans and other securities on a yield-to-maturity basis.

RAIT Financial Trust also generates income from tenant rent and other tenant-related activities at its consolidated real estate properties. In addition, RAIT Financial Trust generates fee and other income through various subsidiaries by providing asset management services and advisory services to its customers.

We presently have a Neutral' recommendation on RAIT Financial Trust.

 
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