Alesco Financial (AFN)

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Bulls: Reasons To Buy Feeling Bullish? Be the first to explain why this would make a good investment See all Bears Reasons Bears: Reasons To Sell Alesco suffers due to IndyMac deferral 100% agree Alesco suffers due to IndyMac deferral Alesco Financial's (AFN) CDO woes never seem to end. Today's blowup comes courtesy of ailing Alt-A lender IndyMac Bancorp (IMB), which announced (in addition to a worse-than-expected quarterly loss) that it would defer the interest payment on its trust preferred... read more View or Edit Reason 1 votes 100% agree Future dividends unlikely as AFN might terminate its REIT status 100% agree Future dividends unlikely as AFN might terminate its REIT status Alesco announced today that it was declaring a Q2 dividend of $0.25 per common share. However, James McEntee, President and CEO of Alesco Financial, cautioned, "Our REIT taxable income to date supports the payment of a $0.25 dividend per share for the quarter. AFN is... read more View or Edit Reason 1 votes 100% agree Send the authors a comment or suggestion Be the first to make a suggestion See All Suggestions

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Alesco Financial Inc. (AFN) is a publicly owned real estate investment trust. The firm typically invests in real estate and other securities including trust-preferred securities, mortgage backed securities, and corporate loan obligations. Alesco Financial is based in Philadelphia, Pennsylvania. The company is controlled by the Cohen family, a recognized name in the mortgage REIT industry.

AFN is a specialty finance company that invests in multiple asset classes with the objective of generating risk-adjusted returns and predictable cash distributions for its stockholders.

[edit] Trends and Forces

[edit] Termination of REIT status likely

James McEntee, President and CEO of Alesco Financial, cautioned, "Our REIT taxable income to date supports the payment of a $0.25 dividend per share for the quarter. AFN is continuing to review strategic alternatives for the company, including whether to continue to maintain its REIT qualification. Any change in strategy or operating results could impact the level of future dividend payments."

With the Kleros CDOs moving closer and closer to liquidation, it is likely that Alesco will remain a REIT for 2008, but will convert to a publicly-traded partnership (PTP) for 2009 and beyond. Alesco's money-making bank and insurance TruPS portfolios are not qualifying REIT assets, and with the lowered spread available on RMBS (limited repo lines available makes it difficult to lever up RMBS to profitability), it makes sense that the Company will end its run as a REIT.

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