Hedged In's  Instablog

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  • sjgold: 
  • Comments (25)
  I am a NYC Real Estate professional. As a 15 year veteran i could not agree more with these statements. we are only in the top of the 3rd inning imo of a major "new-new" (much lower asset values and rents) decline/shakeout in Commercial Real Estate.

  Apr 12 10:04 AM | Link | Reply
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  • iknoknot: 
  • Comments (64)
  stark. Interesting what the 'projects' (sub corps) going under will do to the banks, leaving the 'mother-ship' corps less beaten on than you might expect. I wonder if prologis(PLD) and/or General Growth (GGP) -like companies do this too? Insulation like this changes the face of BK probabilities if so.
  
  As a periodic SRS holder, beware the volatility, as well as the decay effect. Many seem quite happy to use it as a day/swing trader vehicle. Peruse the net for some very grounded articles on the leveraged ETF decay factors. Not a long-term tool, unless you *know* it's going up... :^)
  
  --ikk

  Apr 15 01:02 AM | Link | Reply
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  • Bo Zhou: 
  • Comments (4)
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  I totally agree, that's why I stayed away from all commerical real estate projects when I was choosing investment projects at the end of 2008. However, isn't it a bit too late to short those REITs index, like RTL is already around $13 (from the peak of $50 in '07).

  Apr 16 12:47 PM | Link | Reply
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  • MichaelJ007: 
  • Comments (93)
  Well GGP is officially finished. There will be distressed sales... LOTS OF THEM. not only from REITs and developers going under but also from financial institutions selling relatively decent loans and assets in order to keep their allocations in check with the deteriorating values of the rest of their portfolio. Furthermore a pretty bad cycle of distressed sales/foreclosures, leading to lower values, leading to more distressed.... and so on. It's gonna get ugly. Michigan is already there.

  Apr 16 03:12 PM | Link | Reply
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  • Alan Young: 
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  RTL shares are hard to borrow for shorting. I've tried SRS, but it's very dangerous for longer than a day trade due to compounding--volatility will destroy any returns. (nod to IKK)
  
  But really, I think Bo Zhou may be right. The value destruction is already priced in, in most cases; REITs are trading at a fraction of book value. Very few will be following GGP any time soon, unless things get conspicuously worse all around.

  Apr 16 03:24 PM | Link | Reply
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  • Deepv: 
  • Comments (86)
  I submit that this is totally a consensus view. That is why even top class operators have stocks down 85-90% at this point. MREITS are virtually gone as a sector. Sure some REITS will go bust , but many will survive. In order to make money in the market you must be early in your insights or counter consensus in correct. Unless you have in-depth insight on a paricular company I would not be short the sector. In the end the strong will get stronger and proft from the obvious shakeout. CAse in point: residential housing has been a huge depression since the end of 06 and many homebuildinng stocks have beat the market over this period with begin returns from trough prices. There is now consolidation. Be careful.

  Apr 16 04:43 PM | Link | Reply
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  • aarc: 
  • Comments (372)
  Easy money is practically gone shorting stocks at this stage. Most of the profits has already been pocketed by astute short traders.
  
  Fight for the remaining scraps if you will.
  
  You will need considerable knowledge and exprerience in trend trading since reaction rallies at this stage are going to be very sharp and massive while sell-offs will become more reluctant and time consuming until the final capitulation sell-off.
  
  Do you have the skills needed in order to recognize when the final capitulation is going to happen amidst numerous fake sell-offs and bear rallies that lay ahead?
  
  Gunning stop losses for both the short-term bulls and bears is going to be the name of the game in the next 6 to 9 months.

  Apr 16 07:39 PM | Link | Reply
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  • Jason Tillberg: 
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  • Tillberg Capital Management, Inc.
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  • valueinvestingclass.com
  I think the recent rally in SPG poses a good opportunity to short. I am short for my own account and client accounts. Shorted more today.
  
  Interest rates will rise as soon as inflation takes hold and we get high oil again. If the economy does recover, oil will soar back over $100 I think, mainly because I believe we peaked in Oil production last July. If Oil ingoes back over $100, inflation will soar in food taking food and energy inflation back flying high again. Nothing Fed can do to keep rates low at that point. Nothing. SPG sits on some $18 billion debt. I like my odds.
  
  

  Apr 16 08:12 PM | Link | Reply
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  • Fighting Yoda: 
  • Comments (1029)
  •  • StockTalk (31)
  Commercial real estate has a long way to go down. Fed is planning to get into this business, so some euphoria will kick in - shorting opportunities will emerge. Lest see what GE has to say about it today.

  Apr 17 06:02 AM | Link | Reply
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  • Plant the s...: 
  • Comments (234)
  •  • Instablog (14)
  I think the manufacturing led recovery (inventory replinishment) will leave out the consumer in the beginning. This does match with the consensus that Mall REITs are in serious trouble. One question I have is there will be a geographical story to tell following residential, manufacturing.

  Sep 02 03:36 PM | Link | Reply