REIT Wrecks

REITs Are Not Right for PPIP Players

Patrick, great to see you back on the beat. Thanks for the post!

REITs Not Right for PPIP Players

Patrick, great to see you back on the beat. Thanks for the post!

9 REITs That Had to Be Destroyed in Order to Survive

TB1000 - Maybe. However, aside from that certain declarative adjective in the beginning, you make a fair point and I'll publish a follow up sometime next week.

Cheers, REIT Wrecks

Strategic Hotels & Resorts: A Five Star Hotel REIT on the Cheap

BEE has no debt maturities until 2011. Sounds good, except that commercial mortgage maturities peak in 2011 ($250 billion) and 2012 (roughly $275 billion), and BEE has $1 billion in debt maturities in 2011, followed by $600 million in 2012. Location? Who cares. The Stanford Court Hotel on Nob Hill in San Francisco just went into receivership. Adam, be careful with this stock. BEE is soon to become WAS.

Commercial Real Estate Investors Face Pivotal Q4

Zorro - agreed, we are not overbuilt like the last time, but demand is just evaporating.

I just spoke with the leasing agent for a 700,000 square foot class A building in downtown San Francisco, one block off Montgomery St. Last year, they were getting $62/foot, and now they are booking $30. They have a major tenant that has laid off thousands and is consolidating into another building, leaving them with 375,000 square feet that needs to be leased. By the end of June, they will be 60% vacant. The windows are tinted, but that's "see through" in my book!

They will eventually get that space leased, but going from $60/sf to $30 will obviously have a huge impact on NOI.

A Quick Guide To High Yielding Commercial REITs

This is a great resource (I still refer to it) but so much has changed with the yields. Please check this list of mortgage reits for an updated list of the good, the bad and the still very, very ugly:

www.reitwrecks.com/200...

There are also lists of apartment reits, office reits, etc....

Big CMBS Loans Near Default; CMBX Soars, REITs Tank

DJT - thanks for your comments here and on reitwrecks. I have replied to them in the original post at reitwrecks.com.



On Nov 19 09:31 AM Dear John Thain wrote:

> My mistake, JPMCC 08-C2 *is* in Series 5. The source I went to wasn't
> authoritative and that's my error. It is, however, not necessary
> for my first point.
>
> -DJT

Manhattan Real Estate Is Teetering - Barron's

Sorry the story link is: www.reitwrecks.com/200...

Manhattan Real Estate Is Teetering - Barron's

On the same topic as teetering Manhattan real estate, I also suggest that How Could My Big Beatiful Loan Go So Bad?"should be required reading. Riverton is the precursor to the Stuy Town default.

Redwood Trust: Ravaged by Credit Losses

Not so sure about Acacia and Sequoia stabilizing. Redwood owns the equity tranches in those deals, which is first loss. That money is gone for good, whether it's held to maturity or not. The marks can reverse though, and you need to pick through and see what, if anything, is likely to turn around. But even FSA, in last quarter's brief glimmer of hope after the Bear Stearns debacle, reported that they may be able to reverse some of their marks because spreads had tightened, I wrote about it here: www.reitwrecks.com/200...

Redwood Trust: Ravaged by Credit Losses

TTB, there is an significant nuance to your assertions here, which are otherwise mostly correct. Intrinsic value is so incredibly important in this sector, and as you point out, "market" value on any particular day these days is usually widly disconnected from true intrinsic value . This disconnection relates to the necessary requirements of mark to market accounting, which has depressed book values to such ridiculous levels as to make them nothing more than red herrings for the uninformed.

So, contending, as Criagla1 has done, that a particular Mortgage REIT is trading at an inflated level to "book value" is about as ridiculous as arguing that the GW Bridge is too far from the Hudson River after the tide has run out. Deflated book values are simply widly disconnected from the intrinsic value of cash flows, which in many cases have not changed (nor have have their prospects).

However, there is definitely something going on with RWT's cash flows. I look foward to reading the Redwood Review more closely, but the earnings information I did read indicated that RWT has been forced to convert some of these mark to market, non-cash book losses (temporary) into real, cash book losses (permanent), and that has reduced taxable cash flows and taxable income. Why?because that money is now completely gone, nevermind no longer generating attractive cash flows.

As Patrick points out, this is causing non-GAAP and GAAP to converge, eliminating the disconnect between fallacious, non-intrinsic "market" value and real, intrinsic book value. I don't believe RWT is destined for run off mode yet, but they can't keep experiencing actual realized losses like this. The whole play in this sector is that MTM losses are exaggerated and temporary. To the extent they are becoming permanent at RWT, that is a bad sign.

Mortgage REITs: Stick with the Seasoned Veterans

richandmer, you can find articles on the "veterans" here on Seeking Alpha (click on the "More By REIT Wrecks" link just below the article), or on reitwrecks.com.

Mortgage REITs: Stick with the Seasoned Veterans

Joe, you are right. The suggestion that Real Point was using selective negative data to sell research was flippant. The "headline" increase in delinquencies in the first paragraph of the report was what caught my eye. The full report is obviously more comprehensive, but nonetheless much less attention grabbing - hence the irreverance toward Real Point. I apologize, and I have deleted that suggestion from the original source post.

To be fair however, the point of the article was not to besmirch Real Point. The point of the article was to illustrate out that the more recent vintages of CMBS are experiencing higher levels of default (as your research aptly pointed out), and more importantly, the implications of that for those Mortgage REITs that invested in them. Incidentally, the number on the total level of outstanding CMBS debt that I used in the article came from Wachovia/Intex.