REITBull

Decline in REIT Prices Is Likely to Continue

What are you using as a cap rate to get to $20-$27 on IYR?


On Sep 26 12:36 PM Anthony Alfidi wrote:

> Forget about the 50-day MA and look at the cap rate instead. Evaluate
> a REIT or ETF like a physical piece of property. Fair value IMHO
> for IYR is somewhere between $20-27 depending on how you calculate
> the yield.

Commercial Real Estate - Make Up Your Own Mind

"Almost 60% of the loans out there, at least, were securitized in nature."

User,

I have to disagree with you on this. At the end of Q1 only 21.4% of CRE loans were securitized (MBA). New loans are getting done at 60% LTV for class A, infill markets. I wouldn't take Sam Zell's comments at face value either. Remember that he called a bottom in Residential real estate in Spring 2008.


On Aug 03 09:09 PM User 465743 wrote:

> Good article. But you are missing something. The lending at 60% is
> a fantasy. If you have a Class A office building in a major city,
> you may be 50%. If you have a hotel, a strip mall, a big box retail
> center, an asset located in a small town, etc, forget it. There is
> no financing. The banks are not lending the money that the Feds gave
> them. The only money available, really is money for apartments from
> HUD, Fannie Mae or Freddie Mac. Securitization expanded the credit
> markets so that assets that previously did not get financed were
> financed. Almost 60% of the loans out there, at least, were securitized
> in nature. So, maybe TALF will work, but I don't see the same focus
> on the dangers as I did when AIG was going bust. They focused on
> housing first, because it is politically correct. But they are missing
> the boat on commercial in terms of urgency and this will bring on
> a double dip. Commercial real estate doesn't work without debt. And
> the banks are not helping and the Feds are not helping. If there
> is no debt, there is no market and values are suspect. The jobs multiplier
> for commercial real estate is huge. Big players are taking advantage
> of low Libor rates and sitting on assets. Debt service is being paid
> but their values are in the tank. Zell is right. Eventually assets
> have to be refinanced and it will be a bloodbath. Write your Congressman,
> because they aren't focused on this and are clueless.

How to Profit from the Commercial Real Estate Fallout

I agree with seeking and Ezee. It's also important to note that SRS's underlying index, IYR, is constantly being rebalanced in favor of long positions and it's current holdings are some of the stronger REITs. The time for SRS was last year before your average Joe was talking about the coming crisis in CRE.

I am just starting some research on this, but I think the next play may be to short Residential Apartment REITs (that hold B and C class properties) using long dated puts.

Disclosure: Long IYR

On Jun 18 03:29 PM seekingnothing wrote:

> David, I second Ezee's comments. The SRS has been a poor way to short
> CRE. the SRS is the double inverse of the IYR. SPG is one of the
> major holdings in the IYR. You point out the SPG should be a beneficiary
> of the fall out. Any better plays?

General Growth Properties Files for Bankruptcy

Okay, I feel like a total hypocrite, but I just put a very small position on SRS. It was just too attractive at 26 and change. I still have a much larger position on the long side and will continue to buy URE....Just a short term trade but I thought I would come clean.

General Growth Properties Files for Bankruptcy

Or are the dilutions already priced in? Everyone and their mother saw the offerings coming.

General Growth Properties Files for Bankruptcy

Take a look at the holdings in IYR for your answer on SRS. GGP is nowhere to be found and is the exception not the rule. SPG, KIM, AMB have had success raising capital in the public markets. SRS was bled dry a long time ago. When your average Joe is talking about getting in on the action (i.e. shorting CRE) the bubble is about to pop or already has.

Disclosure: long URE


On Apr 16 11:49 AM [e-mail] wrote:

> Can someone ... ANYONE ... explain to me why GGP, the second largest
> mall operator in the US, is declaring bankruptcy and SRS is within
> spitting distance of an all-time low on the same day?

Do Charge-off Rates Impact the UltraShort Real Estate ETF?

I'm not an accountant by any stretch of the imagination but maybe someone could help me out on this....What would be the effect of securitization on the graph above? In other words, if the majority of residential loans were securitized and the majority of commercial RE loans were held on the balance sheet, would commercial RE charge-offs appear to be disproportionately higher? The graph above may have taken this into account but maybe someone could clarify this for me.

S&P Lowers Insurers Ratings, What About Banks' $400B CMBS Losses?

I could be wrong on this, but I believe a large portion of that 5% delinquency rate is tied to residential construction/developme... loans. It's still bad news for the banks, but it may not be an effective indicator of future CRE loan performance. As you can tell I am taking the contrarian bet on CRE and I am long URE, but I do enjoy your articles.

Housing Bubble: The Sequel

I'm not sure that IYR and SRS will give you the desired results as they track commercial real estate. A better alternative may be to short the XHB on any short term rally.

CMBS Delinquencies Rise: Should the Government Step In?

Something to think about....According to CMBS.org, in 2007 RMBS accounted for almost 60% of single family loans and CMBS accounted for only 30% of total commercial loans. This implies that 70% of commercial loans are portfolio loans. Lenders of portfolio loans have greater flexibility on loan modification and may choose to extend the terms as opposed to foreclosure. Not trying to make any predictions here. CRE will face some pain but maybe not to the magnitude being reported in the media.

My disclaimer: I am a very inexperienced investor and I am long URE so take this with a grain of salt!

The REIT Time to Buy

Toro-

Don't let the cat out of the bag...I am trying to buy up as much as I can at these levels.

Urgent Sell Signal from the CMBS Market, Finally

I am currently buying up as many long REIT positions as I can (I know most of you probably think I belong in a nut house). I also sold my position off in SRS a little too early.

Does the top holdings in IYR rely heavily on CMBS for financing? I do not believe that they do, but perhaps a more experienced investor than I could shed some light on this. Thanks