underperforming asset

Underperforming Asset

An asset that is not generating an expected or necessary return. While the asset may produce income for the company or person possessing it, the income may not be sufficient and is certainly less than expected. Examples of underperforming assets include loans in which payments are irregular or products that have been inefficiently marketed. Companies with underperforming assets are often candidates for both hostile and friendly takeovers. See also: Nonperforming asset.

underperforming asset

An asset that earns a lower rate of return than it would be capable of earning if it were properly used. A firm with underperforming assets is a prime target for takeover. Compare nonperforming asset.
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The project is an underperforming asset that is still recovering from the economic downturn and was sold at or below replacement cost with embedded value in the current rent roll.
It is in the asset-purchase phase (receiving full or greater value for an underperforming asset) that value is created for the company.
Meanwhile Sebi also has set up a committee to scrutinise underperforming asset managers and set long-term policy on the Mutual Fund,or MF, sector, the head regulator said, as government concern mounts over fund redemptions and the sector's stunted development.
If we presume an underperforming asset profit margin of half the 20% corporate margin shown in Table 1, together with a 5% incidence rate (the percentage of all stores that underperform), the company margin impact would be 0.5%.
"Having acquired an underperforming asset in 2008, we recognized the inherent value of Keystone Summit Corporate Park, including its highly strategic location and distinctive design, which allowed us to execute a successful capital-improvement program to bring this business campus to class-A status," said Bill Glazer, founder and president of Keystone Property Group.
"Whether it's paying more for an underperforming asset or funding slotting fees, we find values that companies may be missing," says Emmert.
"Mentorn has to be the main focus for us at the moment - it was the great underperforming asset at Television Corporation," he said.
"Miller is likely to be an underperforming asset for some time," Robert Campagnino, an analyst at Prudential Securities, told the Journal, noting that it's not a business in which Philip Morris is "willing to invest the resources -- in either money or management time -- to fix."
Although this suggests that it may be good to have some gold around, it's pretty thin reasoning for holding a majority of the country's foreign exchange reserves in an underperforming asset. And it's downright maddening when you consider that by hoarding gold the Fed creates scarcity in the market, drives gold to an artificially high price, and gives companies incentives to dig up and spray cyanide on valuable land to extract virgin ore.
Consequently, a carve-out, where a firm seeks to rationalise its business by selling a non-core or potentially underperforming asset, can be hugely beneficial to a corporate, allowing it to refocus on key operations, free up capital and rid its balance sheet of a loss-making entity.
It's essential that Congress and the Bush administration avoid creating a dumping ground for every underperforming asset held by banks and brokerages.
"ICON's corporate barter programs add value to the bottom line: Whether it's paying more for an underperforming asset or funding slotting fees, we find value that companies may be missing.