Saw yesterday's rally in AHR and thought it might be attributable to one of two things: shorts covering or misplaced belief that TALF would help the company's liquidity. Chalk one up to misplaced belief in TALF. The shorts appeared to have reloaded and all fairy tales do not end in THE TALF - sometimes its just plain THE END. I expect to see this trade weaker into the next loan extension expiration (May 8). Price action will begin to replicate that of Thornburg in its waning days. Just as subordinate CMBS faded with realization mezz and existing CRE/CMBS loans wouldnt be going into TALF, AHR will fade. While many will argue that the assets underlying the REIT are fundamentally good (or at least have more value than current marks), liquidity is still king and this emporer has no clothes.
Disclosure: long AHR