From TOM ANDERSON
Letter to the Editor
Ukiah Daily Journal
August 11, 2009 Ukiah Valley, Mendocino, North California
When Developers Diversified Realty announced payment of $30.5 million in second quarter dividends (at $0.20 per share) on July 17, its stock dropped 9.41 percent on the New York Stock Exchange, closing at $4.33 per share. Its historic high was $72.33 in February 2007.
It was hardly reassuring that DDR paid dividends with $3.1 million in cash and $27.4 million in common stock. Stated otherwise, each 20-cent dividend was for two cents in cash and 18 cents of corporate wall paper.
But what else could it do?
DDR was one of the first commercial mortgage-backed securities peddlers to line up for Federal Reserve bail-out money earlier this month. A column in “The Economist” magazine in July noted, however, that while the Federal Reserve’s program had “extended to commercial mortgage backed securities, … many are or will become ineligible under its present rules because of ratings downgrades.”
Since all three rating services have downgraded DDR to junk bond status, the corporation’s hand-out hopes, not to say its swaggering in our neighborhood, seem like just so much whistling in the dark.
Does anyone, including DDR’s directors, believe this derelict will be capable of developing more than a local disaster in this county?