Use access key #2 to skip to page content.

cbwang888 (29.79)

REIT , time to short aggressively?

Recs

3

October 26, 2008 – Comments (5) | RELATED TICKERS: SPG , VNQ , RWR

 

They are many factors that make me think that REIT sector has more downsides from here.

1. Most of them are OVER-leveraged (BSC, LEH like?). Look at GGP and DDR case.

2. After black October, most stocks are re-priced for recession. Now retailers over-expanded last few years has to either wind down shops or go out of business. 

3. Overbuilt on easy credits in the same fashion to housing bubble. Real estate value for commerical has to come down like housing (asset value / book value are overstated)

4. Current tanents will ask for lower rents since vacancy is on the way up. Cash flow for REITs will drop very quickly.

5. With high debts and continued credit crunch, there is little room to breathe for paying back the interests of their debts.

6. Many of them are still trading over the inflated book value as some investors are still insisting on looking at the past EPS...

I think there are more points but this is enough for me to stay short ...

5 Comments – Post Your Own

#1) On October 26, 2008 at 1:26 PM, socialconscious wrote:

All Reits do have a ton of debt the best barometer of market sentiment is the metric.If you see a declining metric and especially that they cannot afford the divided its PAYDIRT. In hotel REITS its REVPAR(Revenue per available room)

Commercial big US mall developers are in serious trouble. Who is going to finance them?  Heck yes SHOOORT! But know the metric.

Residential be careful because if they are rental properties they can be considered by the market alternatives when you lose you house.Respectfully I am of the opinion keep away but in all know the metric.

On hoteIs have lost tons on DRH and HST and they are in the mid(HST)and luxury tiers(DRH). I think and hope the pain in hotels is baked in. Is there A ETF Reit short or ETF you can short?  ALL IMHO, respectfully submitted and maybe elementary.Alll best. Social C

Report this comment
#2) On October 26, 2008 at 4:12 PM, Tastylunch (99.62) wrote:

Yeha i dunno how much more some of these clunkers have down to go, I shorted a bunch last week and all went into the green for eoe I think,

Now it's a question of bankruptcy or survival for GGP and Maguire. If you think they will survive you probably dont want to risk shorting here. styaing short is a different question.

SPG, Simon properties group is one that I think has more downide room to run. Has mediocre regional malls, levered 7 to 1, income has dropped 50% yoy.

Report this comment
#3) On October 26, 2008 at 6:00 PM, cbwang888 (29.79) wrote:

 

I will only focus on shorting retail REITS for now. After this Xmas shopping sessions, may retailers will panick and close more shops.

I'm also buying short-term/mid-term puts gradually ...

Report this comment
#4) On October 27, 2008 at 2:08 PM, Tastylunch (99.62) wrote:

SPG is a retail REIT

Report this comment
#5) On October 28, 2008 at 5:44 PM, cbwang888 (29.79) wrote:

DOW up 900. REIT ETF like RWR rally 18% to $43. Not a good day for shorts...

Report this comment

Featured Broker Partners