Zacks_Analysts' Blog : RAIT Extends Secured Credit Facility - Analyst Blog

RAIT Financial Trust (RAS), a real estate investment trust (REIT), recently extended one of its secured credit facility to 2011. Since the second quarter of 2009, the company has extended all its three secured credit facilities, which are currently scheduled to mature in 2011.

The company will pay a variable interest rate between 4.5% and 5% on outstanding debt under its credit facilities. RAIT Financial Trust has an aggregate unpaid principal balance of $51 million on all the three secured credit facilities. The company expects to fund approximately $7 million of principal amortization in 2010 with the balance due in 2011.

RAIT Financial Trust is primarily engaged in the lending and investment aspects of the real estate business. The company primarily invests in the following asset classes: 1) commercial mortgages and mezzanine loans; 2) trust preferred securities; 3) residential mortgage loans; 4) mortgage-backed securities; 5) real estate investments; and 6) preferred equity in entities that own real estate.

RAIT Financial Trust generates revenues from the interest and dividend income from its investment portfolio, origination fees, and asset management fees. The company’s net investment income is the difference between interest income on the investment portfolio and the cost of financing the portfolio. Most of the company’s portfolio is financed by borrowings and securitizations. The company uses warehouse agreements, collateralized debt obligations (CDOs), and lines of credit to finance the majority of its investments.