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The lackluster public debuts of REITs today - including Tom Barrack's Colony Financial (CLNY) -...

Thursday, September 24, 2009, 6:29 PM ET
The lackluster public debuts of REITs today - including Tom Barrack's Colony Financial (CLNY) - may be due to a simple reason: There's a glut of similarly structured vulture funds looking for money. And most new REITs are opening below offering price, as an analyst says: "If you know it’s going to trade down, why buy in the IPO?"

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H.J. Huneycutt Comments (1193)

There are still a reasonable number of REITs at fairly low prices on the market. Why buy a new REIT that you know little about at an IPO premium price when you could simply buy the established REITs at bargain prices and have a good idea of what you're getting beforehand?

Also ... I'm not sure that I subscribe to the idea that real estate is a great buy right now. Rather, I subscribe to the idea that many REITs are so absurdly discounted, that even if RE prices drop significantly, it's still completely possible that you could make a nice return.

So in essence, I can't see any reason why I would want to buy into these "vulture funds" when there are much better alternatives to make a profit. Plus, most traditional REITs offer a steady stream of income --- I'm not sure what these "vulture funds" will offer. It's a huge unknown.

24 Sep 2009, 11:55 PM Reply Like

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