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cbwang888 (25.57)

Is Commercial REITs the next shoe to drop?

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October 05, 2011 – Comments (1) | RELATED TICKERS: DRV , SRS , URE


Commercial REITs, like all REITs, have to pay 90+% of  their earnings in dividends to their shareholders. They are mostly heavily in debts, and even though some raised cash during 2009 by selling common shares or issuing more debts, they are still vulnerable to on-going tight credit environment. Now the governments all over the world also are competing for more money to fill their never shrinking deficits. 

 

Once these REITs' credits get downgraded along with the economic outlooks (stagnation/prolonging recession), they will find themselves want to hold on to their earnings, instead of paying them to the shareholders. Is the music going to stop anytime soon?  

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