Here's more bad news for property owners. A mortgage REIT is going bankrupt:
A quick look at their financials brings no surprises. Their last three balance sheets showed increasingly negative retained earnings and free cash flow. Their net income went sharply negative in 2007 and then their financial statements seem to disappear, with the exception of a few SEC filings in 2008 that indicate the likelihood that the company's operations will cease. Numbers that bad never lie.
REIT investors can look forward to more disappointing stories like this one. Investors enticed by the cash flow of REITs should proceed with extreme caution.
Full disclosure: No position in AMOA.PK. Long puts against IYR.
Real estate investment trust American Mortgage Acceptance Co filed for Chapter 11 bankruptcy protection on Monday, blaming a sharp drop in property values.
A quick look at their financials brings no surprises. Their last three balance sheets showed increasingly negative retained earnings and free cash flow. Their net income went sharply negative in 2007 and then their financial statements seem to disappear, with the exception of a few SEC filings in 2008 that indicate the likelihood that the company's operations will cease. Numbers that bad never lie.
REIT investors can look forward to more disappointing stories like this one. Investors enticed by the cash flow of REITs should proceed with extreme caution.
Full disclosure: No position in AMOA.PK. Long puts against IYR.
