Sunday, October 17, 2010

LOC Clarification
In the last post I discussed a line of credit.  I was not questioning the line of credit in itself or its mechanics.  I was showing exasperation on opaque disclosure.   Why does a line of credit warrant such nonsensical misdirection?  Why not just state, "We obtained a $X million line or credit, of which $Y million is available to us based collateral assigned to secure the line of credit and borrowing limits against the collateral.  We have borrowed $Z million on the line of credit."  If a company goes out of its way to obscure something as straightforward as how much it used on its line of credit, it makes me question the entire disclosure document.

1 comment:

Anonymous said...

Behringer Harvard Multi-Family REIT is the firm you are referring too. They use off balance sheet financing and have cut their dividend of late, which still has them over paying. The REIT is paying income on development and lease up on deals, which has an average price per door of over $390k. This REIT will NEVER be able to over come the front-end load and provide a return of capital to its shareholders. I would strongly recommend the share repurchase program to the current investors on this REIT.