bleonard

Bad News REITs: Unsold Housing Exerts Downward Pressure on Rents

Vincent- I agree with you. I just listened to a EQR presentation from 12/06. The CEO seems to think that the private equity people have it right and that the street/public are hung up on traditional yeilds and multiples. They think that even though the initail NOI's on deals are very low, they still make sense because they are buying below replacement cost! I question whether they should be buying at all. Or why would anyone want to buy these with them all trading around 25x FFO. Plus FFO is overstated due to maintenance capx, which seems to run around 40-50% of depreciation. If you look at it that way, the numbers are much worse.

I find it hard to believe that declining home prices won't hurt rents.