This year has proved to be a good one for previously-distressed real estate firms. Not only have developers like Forest City (FCE.A) gotten themselves back together, but so have real estate lenders and investors like iStar Financial (SFI).
After flirting with disaster in 2008 and 2009 (more like a committed
relationship than flirting, really), iStar has proven that there is life
after near-death.
iStar's recovery has been based upon progress
on multiple fronts. Not only has the company been reducing leverage and
lowering its cost of debt to more economical/viable levels, management
has made a concerted effort to clean up and maximize the value of the
legacy portfolio while simultaneously looking for value-generating
growth with new investments. There's still work to be done, but with a
solid core in net leasing, growth opportunities in lending, and
self-improvement potential in owned properties, I like iStar's odds for
continuing to build value.
A couple of notes are worth making
right at the beginning. First, iStar will be changing its ticker in
about a week (as of this writing) to "STAR". Second, this is an
exceedingly difficult company to value for investors not well acquainted
with valuing loan books, lease operations, properties and so on. I
don't wish to scare off or insult readers, but this is not a
beginner-level financial stock.
Please continue here:
IStar Financial Already Shining Brighter
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