Emerald

Mack-Cali Late to the (Follow-On) Party

All REIT's are not created equal. First, many REIT's are using new stock issuance to pay down bank lines, thereby cutting debt exposure (good), but diluting current shareholders at these low prices (bad). Note that many of the underwriters are using the proceeds to pay down their own lines. Yes, it is disclosed in the Offering Memo, but this is incestuous.

Second, retail and office REIT's are facing a leasing storm that theatens to take them under given the high tenant improvement costs they face to replace tenants. Many well capitalized apartment REIT's are under pressure from declining employment, but are good buys at these depressed prices, assuming they have taken care of debt maturities for 2009 and 2010. Examples of these better apartment REIT's are AvalonBay and Equity Residential. This sector will also be the first to rebound and pays a dividend to wait. Be careful shorting REIT's via the SRS because it has large apartment REITs in it and is less likely to have big declines from here. Note : Long EQR.