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

After just posting the next installment of my "proof of impending bankruptcy" for a REIT which we identified for my subscribers, I realized there was an important message embedded within for all who still do not see a significant CRE reset in the works

The piece that I posted (click here for the list of documents for download [10]), "Scenario III : Sale of properties to fund debt repayment" covers the argument for the latest forensic analysis REIT subject potentially wriggling out of the bankruptcy line by selling off properties (at a loss) in order to stave off insolvency. The problem with that argument is that insolvency is already here for many property holders that leveraged up during the bubble - still here and never left. As stated in previous posts, this company is virtually a guaranteed bankruptcy. My aim is to cover all of the bases in order to build an unassailable argument for the share price of this company to be ZERO or lower. I have on tap, but yet to be published a recapitalization
and individual property analyses. With those reseearch 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!

So, I'm sure many of you are asking... What does this have to do with the price of tea in China? Well, as my grandmother told me, there is never JUST ONE ROACH! This company is in a precarious position where it can't even sell off its properties for a thin dime to raise capital, and if this company is in said position it's nearly guaranteed that it has plenty of company. The problem is that it is near impossible to discern this type of situation without a lot of labor borne by guys/girls who really know their way around real estate valuation. To wit, and as excerpted from today's subscriber download...

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 analysisl. 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 this point 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