W.P. Carey & Co. LLC (WPC) Analysis - Stock Analysis, Stock Ratings

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Thornburg Mortgage Lives to See Another Day But at a Huge Cost
Excerpt from the InvestorGuide.com Stock of the Day on 4/2/2008

At first glance, Thornburg Mortgage might seem like just another name in the long list of mortgage lenders that is in trouble. But a closer look reveals that the Santa Fe, N.M. based company is actually quite different from those that made irresponsible and risky loans to subprime borrowers (i.e. borrowers with poor credit records). Instead, Thornburg specializes in catering to a more affluent customer base with strong credit histories (i.e. prime borrowers) and the default rate on the mortgages it has originated was an industry low 0.44%, as of December 31, 2007. So then why it is fighting for its life and will it be around to see the end of this mortgage bust cycle?

A combination of excessive borrowing on its part and irrational market influences has Thornburg in dire straits. The trouble started last summer when the credit markets started to freeze up and the housing bubble was starting to burst. Thornburg received margin calls from its lenders. Thornburg is involved both in lending money to prospective homeowners who typically have strong credit scores and who are looking for 'jumbo mortgages' (i.e. mortgages of greater than $417,000) and it also invests in mortgages issued by others. It finances its operations by borrowing large sums of money on a short-term basis and submitting parts of its mortgage portfolio as collateral for these loans. As the problems in the mortgage market started depressing the value of the Thornburg's mortgage portfolio, the value of the collateral that the company had placed with its lenders fell and in turn, those lenders issued margin calls, i.e. demands that Thornburg provide additional collateral. In order to meet these margin calls in August of last year, Thornburg sold approximately $21 billion of its investment mortgage portfolio at a steep discount to raise cash. It also issued about $500 million in new preferred shares, diluting the stake held by existing shareholders. More >

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Public Storage Inc. Acquires Shurgard Storage Centers in $3.1bn Deal
Excerpt from the InvestorGuide.com Stock of the Day on 3/7/2006

Competition in the storage business shrank today as Public Storage Inc. (PSA: Charts, News, Offers) bought out Shurgard Storage Centers (SHU: Charts, News, Offers) for $3.1 billion. Shurgard turned down an acquisition offer last August equaling $2.4 billion. The new merger offer should be completed and approved by the close of the second quarter 2006. In mid-morning session, PSA, the nation's biggest self-storage business, was trading lower by 1.71 percent at $78.10 per share, and Shurgard was trading lower by 0.42 percent at $63.33 per share. Given the last week's economic data, will the self storage business be able to maintain these share price levels? More >