Ricard

Real-Estate Veteran Sees a Rare Opportunity to Buy Quality REITs - Barron's

This article seems to pin its hopes on the CNBC argument that the recession will end 3Q this year.

"Cohen notes that while REITs' assets under management are way down from two years ago, very little of the contraction is due to fund redemptions - but rather a drop in the value of the assets. Unlike the mass exodus from hedge funds, institutional REIT investors are staying put."

Musical chairs. Or, the last out of a theater on fire. Neither scenario is conducive to buying REITs right now. Maybe after the fire has died down a bit, and the corpses have been counted.



"It's true that vacancy rates are soaring, but on the flipside new construction in negligible, both because rents are too cheap to justify building, and because of a lack of reasonably-priced credit."

So...the sector is cratering. Great...



At some point the economy will turn, Cohen says, and retailers will start looking for space."

That has to be a joke. Retailers are only BEGINNING to vacate. The worst is most likely yet to come, now that retailers have a stark picture of where they stand after last Christmas. That was the dam breaking...now will come the flood.

Despite your cheery optimism, I'm still not sure if I would want to invest in this sector. Homebuilders have been down for years now, and without any hope of their fundamentals improving in the foreseeable future, there is always that chance of bankruptcy or liquidation. Furthermore, for these REITs, they have assets under management, whereas homebuilders have a fire-and-forget model of business (I know that's not true for some who have been stuck holding land). That significantly increases chances of a cash crunch if things turn out poorly from here onward.