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  • Avalon Bay: A Look at Apartment REITs [View article]
    The issue with debt faced by REITs is similar to most businesses today. It isn't really the debt if the cashflow is in place, and the property can carry the debt, and they have a **loan term that will outlast our recession. ** And that's the problem. Most commercial properties have underlying loans that are amortized 30 years, but due in 5 or 6. A few years back, I was looking at buying a 20 unit multiple. I could get a 30 due in 5 for about 5%. Pretty good. Those loans are no longer available, and if you can get one, lots of luck getting it for a rate like that. That means costs increase for the REIT. Couple that with dropping rents, and you begin to have cashflow problems, even if you can get the loan. (Look at GGP.) Once you have cashlow problems, you cut the dividend or pay in stocks, which dilutes the investor equity. When you cut the dividend or dilute the pool, the stock price drops. Ugly.

    Mar 03 20:53 pm |Rating: +2 -1 |Link to Comment
  • AvalonBay: Renters Are Doubling Up [View article]
    Yep... Sharing and splitting the rent.... jegan


    On Feb 11 09:09 AM nobull wrote:

    > What does "doubling up" mean? Is this about people sharing?
    > Avalons were always overpriced. Now their rents are coming down to
    > the mean.
    Feb 11 12:53 pm |Rating: +1 0 |Link to Comment
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