wobatus

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

TD actually switched sides and works for a hedgie wanting to bail on his shorts, so drums up short interest and lots of sellers so he can cover on the cheap.

Just kidding. Kinda.

You'd have to go back and see the timing of the "Great REIT UnRaveling" post and this one, etc.

When you start getting free, publicly disseminated advice that makes a hell of a lot of sense, but made more sense if acted upon sooner and privately first....

Oh, i'm being cynical. These reports were fairly contemporaenous with the shenaigans. At least the public docs. There must have been some lead time to all that.

All the best, y'all.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Volume has not been higher on down days generally. NYCE volume was lower on Monday. of course friday was opex.

That said, if what you say is being done, why was it not done when the market went to 12 year lows? or if "they" benefit from that, why is it up now?

Anyway, i suppose if we forced banks to liquidate today, they are insolvent. I saw that scene in It's a Wonderful Life. :) Kidding. I know citi has gone bust about every 10 years for decades now.


On Apr 22 01:51 PM dcb wrote:

> Folks, we are all smart here. Let us face facts. the banks are insolvent
>
> as we and the IMF all know. Because of the public distaste out gov't
> can't get money to them directly anymore. so every other trick in
> the book is OK.
>
> take a look at the S&P volume buying spikes. when things are
> going up the buying is small and measured. when things start to go
> down and we would turn down someone is spending a lot of money to
> make sure it isn't happening. I have never seen it so clear that
> an agent is doing all it can to prop up the market. we are dealing
> with a market that is being manipulated and a covert program to capitalize
> the banks at the expense of the tax payer at the same time a massive
> disinformation campaign (like Bush and the iraq war) is being fought
> by our government.
>
> Have to keep the market propped up to get rid of inflated crap assets
> to the public. happening with our governments blessing because they
> won't tell us the truth and can't get the money they need to the
> banks via the front door. At the same time lobby money has bought
> enough influence in washington that it does't really matter which
> party is in power.
>
> We have the illusion of democracy, no more that that.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Hate to be sensitive, but that was a pretty mild post for someone to bother to give it a thumbs down. Oh well. Likely not the only. :)


On Apr 22 11:08 AM wobatus wrote:

> The banks obviously were desperate to get the debt off their books.
> Why? They have capital requirements and it is hard to roll and the
> market pricem, because of that, is low. Why is it hard to roll? Because
> many who would lend also have requirements and can't do it, and many
> of the shadow system can't do it because THEIR funding sources have
> capital requirments, losses in other areas etc. And because, due
> to unemployment, reining in of credit card limits, again due to their
> other losses, and over-extended consumers, malls are losing stores,a
> nd rents are being driven down, and collateral is lower, with other
> reits having to raise, some in bankruptcy a la GGP.
>
> The subprime crisiis, we know is bad. Commercial real esatte, same.
> But (and as Pee Wee herman says everybody has a big butt):
>
> GGP could service debt. It just couldn't roll. Yes, some reits are
> awful. Some are usually fairly well run and got in too deep, not
> seeing through to what happens in a credit drain the likes of which
> hasn't been seen ina longwhile, to this extent maybe not in their
> working lives or in their lives period.
>
> Yet GGP services. KIM services. Not all of KIM's tenants are Circuit
> City or Linens and Things. GGP is bankrupt. But Ackman gives them
> DiP funding and holds many tiers through equity.
>
> I don't and did not recommend their (GGP's) equity. But Ackman is
> no dummy. He made a killing shorting MBI etc.
>
> I pointed out, in response to another "Tyler" post, that while I
> wouldn't buy GGP, i liked KIM below $7. Despite the risk. And reporting
> of The Great REIT Unraveling reaching a crescendo only made that
> seem more likely, and that some may get out of those shorts that
> had been in for a while. if only temporarily.
>
> KIM and reits have had a nice run, and could raise equity to breath
> for a spell.
>
> But let's get back to this thread: why would it be so hard to roll
> over performing loans? Because things will get worse? Things always
> seem oike they will be a never ending spiral down. You always read
> that. More unemployed, fewer people to buy goods, etc. if that were
> always never ending we would never get out of any downcycle. maybe
> there is something to this social safety net? :)
>
> I digress.
>
> Some folks figured out how things would play when their was a big
> hole blown in the side of the banks. Smart people. Kudos. There is
> now a push back. One can say it is manipulation. There is a lot of
> manipulation that goes on in equity markets. both ways.
>
> In the very long run, if you can get past the short run (always a
> big if, look at GGP), reality does set in. Reality right now may
> say more unemployment, economy getting worse before it gets better.
>
>
> What will be reality in 3 years? 5 years? 10 years? Maybe everyone
> will shop on amazon for what limited amiounts of stuff they can afford.
> maybe folks will still want to hit a mall now and then. Although
> I personally don't want any stuffed spuds at the food court, and
> I am past the age where I play video games, and why play there when
> you have your wii and playstation? But heck, i gotta do something
> on saturday, and i DO need a new weed-whacker, and we have that wedding
> upstate...maybe I can get a gift at, oh, the hell with Nordstrom,
> they'll just have to be happy with that crap from TJmaxx.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

The banks obviously were desperate to get the debt off their books. Why? They have capital requirements and it is hard to roll and the market pricem, because of that, is low. Why is it hard to roll? Because many who would lend also have requirements and can't do it, and many of the shadow system can't do it because THEIR funding sources have capital requirments, losses in other areas etc. And because, due to unemployment, reining in of credit card limits, again due to their other losses, and over-extended consumers, malls are losing stores,a nd rents are being driven down, and collateral is lower, with other reits having to raise, some in bankruptcy a la GGP.

The subprime crisiis, we know is bad. Commercial real esatte, same. But (and as Pee Wee herman says everybody has a big butt):

GGP could service debt. It just couldn't roll. Yes, some reits are awful. Some are usually fairly well run and got in too deep, not seeing through to what happens in a credit drain the likes of which hasn't been seen ina longwhile, to this extent maybe not in their working lives or in their lives period.

Yet GGP services. KIM services. Not all of KIM's tenants are Circuit City or Linens and Things. GGP is bankrupt. But Ackman gives them DiP funding and holds many tiers through equity.

I don't and did not recommend their (GGP's) equity. But Ackman is no dummy. He made a killing shorting MBI etc.

I pointed out, in response to another "Tyler" post, that while I wouldn't buy GGP, i liked KIM below $7. Despite the risk. And reporting of The Great REIT Unraveling reaching a crescendo only made that seem more likely, and that some may get out of those shorts that had been in for a while. if only temporarily.

KIM and reits have had a nice run, and could raise equity to breath for a spell.

But let's get back to this thread: why would it be so hard to roll over performing loans? Because things will get worse? Things always seem oike they will be a never ending spiral down. You always read that. More unemployed, fewer people to buy goods, etc. if that were always never ending we would never get out of any downcycle. maybe there is something to this social safety net? :)

I digress.

Some folks figured out how things would play when their was a big hole blown in the side of the banks. Smart people. Kudos. There is now a push back. One can say it is manipulation. There is a lot of manipulation that goes on in equity markets. both ways.

In the very long run, if you can get past the short run (always a big if, look at GGP), reality does set in. Reality right now may say more unemployment, economy getting worse before it gets better.

What will be reality in 3 years? 5 years? 10 years? Maybe everyone will shop on amazon for what limited amiounts of stuff they can afford. maybe folks will still want to hit a mall now and then. Although I personally don't want any stuffed spuds at the food court, and I am past the age where I play video games, and why play there when you have your wii and playstation? But heck, i gotta do something on saturday, and i DO need a new weed-whacker, and we have that wedding upstate...maybe I can get a gift at, oh, the hell with Nordstrom, they'll just have to be happy with that crap from TJmaxx.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Good one. Sorry to be pedantic on the other post. :)


On Apr 22 09:26 AM Insiderman wrote:

> Sounds to me like Jeffrey Donnelly, CFA needs to review the CFA Institute
> Research Objectivity Standards:
>
> 4.0 (a) ii. Ensure that investment banking objectives or employees
> do not have the ability to influence or affect research or recommendations;
>
>

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

A picayune point, but the compliance department doesn't issue a report. They may bless it. Perhaps they were side-stepped, duped or brow-beaten (the last 2 hardly good defenses). But yes, the firm is to blame.


On Apr 22 09:50 AM Insiderman wrote:

> There is simply NO WAY a firm's compliance department should issue
> a market moving research report within 48 hours of an issue.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Fair enough. Now i will flip flop as devil's advocate. Who is buying the higher priced offering? Are they unsophisticated? Even if so, are they, and pardon the hoary phrase, free, white and 21? Under durress? An off balance sheet SIV of Merrill et al.? :)


On Apr 22 10:08 AM jhartz wrote:

> The VNO (Vornado) stock was manipulated upwards some two and a half
> points last night at the close. Is it a coincidence that a close
> of 47 allowed ML and cohorts to price the offering of 14 million
> new shares at a higher level?
>
> If the regulatory agencies allow the financial institiutions to keep
> getting away with this outright manipulation and maneuvering against
> the interests of unsuspecting investors, there will be another long
> period of chaos and deep suspicion that will keep independent investors
> away from the market. This has happened before, and it served to
> change the way people employed their surplus capital.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

How about the already outstanding, non-insider equity holders? Well, not doing too bad now...I think it is fair game to point out the disclosure. It deserves a littlwe prominent display a la a warning on the side of a cigarette pack-could be dangerous for your health. And I speak as a holder of KIM.


On Apr 22 09:23 AM jasonjim wrote:

> I see nothing wrong about the transactions discussed in this article.
> It is normal business with a buyer beware sign. The banks win by
> having their loans repaid. DRE and WRI and other REITs win because
> they get rid of debt on their balance sheets. The purchasers of the
> equity offering who buy at a discount may or may not win depending
> upon how the market views the transaction. Since DRE and WRI and
> other REITs are in a much better position now to conduct their business
> I expect that their shares will rise, maybe considerably. So the
> purchasers of the new equity will win also. Everybody wins, so what
> is the problem here?

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

I gotta say, having been a critic: nice work Tyler and Zero hedge. Thanks.

IF (big if) the credit markets thaw, I like KIM. Despite the debt, on and off balance sheet. GGP, for example, had decent cash flow. It just couldn't roll. KIM is raising equity and raised unsecured. Obviously, the banks are pulling in their horns. And it is risky. But no pain no gain.

Did you see Milken's paean to capital structure adjustments in yesterday's WSJ?

But in any event, if one is going to roll the dice, good to know what is going on. So kudos, Messrsr. Fight Club Pseudonym and ZH. File this under you can lead a horse to water but can't make him drink.

The Great REIT Unravelling Begins? Simon Property Group Defaults on Loan

Since the morning this article was published, SPG is up 56%. KIM, which i suggested (I said I wouldn't buy GGP, now bankrupt), is up 67%.

Of course, the story isn't over. More retail bankruptcies to come. But, KIM raised equity and was able to do some debt deals, the sky hasn't fallen in.

Indeed, GGP remains cash flow able to service. It just couldn't roll in this market. Ackman is providing DiP financing.

And KIM is down about 50% from the beginning of the year. I took some off the table in the early january bounce.

Long term, KIM will be in very good position, i'd say. The capital markets nearly collapsed. Some benefited greatly from that.

Later.

The Great REIT Unravelling Begins? Simon Property Group Defaults on Loan

i figured kim might be a decent bet. shorty was covering his bets, not reloading. maybe now they reload. peace out, all my negative recommenders. :)


On Mar 31 07:27 AM wobatus wrote:

> online.wsj.com/article...;amp;mod=yahoo_hs
>
>
> I'm a bankruptcy lawyer, btw. This article gives you the picture
> of what is happening. Not that I'd buy General Growth. KIM may
> be a good gamble.

The Great REIT Unravelling Begins? Simon Property Group Defaults on Loan

How's the great unraveling going? I warned ya. This was written for folks ready to get out of their shorts. Malach knows what's goin' on.


On Mar 31 07:22 AM wobatus wrote:

> good point malach. tyler is just shillin'.

The Great REIT Unravelling Begins? Simon Property Group Defaults on Loan

online.wsj.com/article...;mod=yahoo_hs

I'm a bankruptcy lawyer, btw. This article gives you the picture of what is happening. Not that I'd buy General Growth. KIM may be a good gamble.

The Great REIT Unravelling Begins? Simon Property Group Defaults on Loan

good point malach. tyler is just shillin'.

Profiting from a Basket of Commercial Real Estate Shorts

A bit of a blind squirrel moment with KIM. It ended today only 7 cents off last friday's close. Had a big trip down and back since then. A lot of this market is just traders (and it is Trader mark after all). Nothing much fundamental changed for KIM since last Friday. I think a lot of the last leg down in the market and this bounce back are just people overeracting either way,and momentum pushing it all along.

KIM is in the mall biz, so some tough sledding, but a very well run reit and it got oversold. Could see it pulling back from here (short covering fueled some of this). But in the fullness of time folks will wish they bought some kim under $10.