• Gramercy Property Trust Inc. Message Board

  • Jim Jim Sep 6, 2013 17:30 Flag

    Why paying the Preferreds is a bad idea

    Say you have a friend that lent you $35 million. The friend is charging you 0% interest. That's not all. Your friend is willing to lend you $2 million more every quarter at 0% interest. Well, what are you going to do with this money? You could buy properties and lease them at 9-10% cap rates. You are USING YOUR FRIEND'S MONEY to earn 10% FOR YOURSELF!

    Of course you have to pay him/her back someday, but you'll only have to do that when you NEED to do it to remain a REIT.

    So simple. So profitable!

    Anybody want to lend me $35 million at 0%? I promise I'll give it back to you someday.

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