RAIT Financial gets default notice relating to 7.125%, 7.625% notes

By Wendy Van Sickle

Columbus, Ohio, Aug. 26 – RAIT Financial Trust received a default notice on Aug. 20 relating to its $65.4 million of 7.125% $25-par senior notes due 2019 and its $56.3 million of 7.625% $25 par senior notes due 2024, according to an 8-K filing with the Securities and Exchange Commission.

The default notice, delivered by Wells Fargo Bank, NA, as trustee, states the RAIT defaulted by failing to timely file its quarterly report for the fiscal quarter ended March 31.

In a May 16 notification of late filing, RAIT reported its failure to timely file the quarterly report was because it requires additional time to complete an evaluation of whether its investments in preferred equity interests should be accounted for as loans or as equity method investments.

RAIT submitted a request for accounting guidance from the Office of the Chief Accountant of the SEC regarding the accounting treatment for its preferred equity interests on Aug. 14, according to the 8-K filing.

“Upon receipt of the requested guidance, RAIT will determine the appropriate response consistent with such guidance,” the filing states.

The default will not become an event of default unless RAIT does not remedy the default within 60 days of its receipt of the notes. If an event of default occurs, RAIT may choose to pay additional interest of 50 basis points on each series of notes for up to one year rather than accelerate its repayment obligation.

The real estate investment trust is based in Philadelphia.

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