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Reggie Middleton's CRE Short List, Part 1
Here is the short list of REITs that I have been promising subscribers for the last week:
Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb.
I plan on releasing a full forensic report this week (providing it
passes the QA check before Friday) which will actually include property
level analysis (for Pro subscribers) of the REIT in question's entire portfolio. The "pre"short list of REITs examined are available to non-subscribers below.
Over two years ago I forecasted a land recession in this country. I
featured the work of a guest blogger whom I respect and I believe this
is a very good time to rehash what was said in Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt I and Straight Talk From the Homebuilder CFO: The Coming Land Recession, Pt II. Due to space constraints, I will actually repost these as separate articles.
For those who are just starting to follow round two of my commercial
real estate analysis, this is what has led us to this point:
- Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals?: The divergence of market prices from fundamentals has reached, if not surpassed, the legendary Dot.Com levels
- Re: Commercial Real Estate and REITs - It's About That Time, again...: self explanatory
- Here's a Big Company Bailout by the Taxpayer That Even the Taxpayer's Missed!): The sell side pump and dump scheme, exposed!
- I am still developing my REIT thesis: on the redevelopment of the Thesis
- Bad CRE, Rotten Home Loans, and the End of US Banking Prominence?:
This is a "MUST READ" for it goes into explicit detail in comparing our
current trajectory with that of Japan's 20 year's ago, and the
conclusions are quite compelling. I'll paste one graphic here in an
attempt to convey the gist of the post to all of those who feel that we
are in a "V" shaped recovery (GDP-wise) that can justify CRE
reflation...
This really calls into question the usefulness of broad GDP reports in
anticipating asset value recovery after a land bubble bust. See "Who are ya gonna believe, the pundits or your lying eyes?" (for pictures), "Who are you going to believe, the pundits or your lying eyes, part 2" (for numbers and a very shaky video), and Boo!!! Will Halloween Scare the Market into Respecting the Fundamentals? for an idea of what needs to be cleared up in this space before we move forward.
I will also be looking a little deeper into Realty Income in December.
I have found some info on their closely "guarded" real estate
portfolio, which may allow me to perform a realistic valuation. Chances
are things will not appear as rosy as management makes them out to be,
but we shall see.
Of the list of REITs analyzed below, we have:
- removed 4 REITs with no real estate investment (involved in
investing primarily in mortgage backed securities, which we will pursue
at a later date); - removed 7 REITs with LTV of less than 30%
- and selected 11 REITs based on the leverage metrics and operational performance.
One REIT that ended up on the shortlist actually had a few significant
positives that would not show up on a Bloomberg scan. These positives
have the potential to cause it to stand out as a potential long
candidate in what I see as a maelstrom of under-performance in the REIT
sector over the medium term. It is included in the shortlist note for
subscribers (
Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb).
|
Initial list of 59 REITs with share price of $15 per share and market cap of more than $500 mn |
|||
|
Ticker |
Short Name |
Price |
Current Market Cap |
|
SPG US Equity |
SIMON PROPERTY |
68.8 |
19492 |
|
PSA US Equity |
PUBLIC STORAGE |
74.37 |
12820 |
|
VNO US Equity |
VORNADO RLTY TST |
60.5 |
10857 |
|
NLY US Equity |
ANNALY CAPITAL M |
17.16 |
9341 |
|
HCP US Equity |
HCP INC |
30.12 |
8828 |
|
BXP US Equity |
BOSTON PROPERTIE |
62.34 |
8639 |
|
EQR US Equity |
EQUITY RESIDENTI |
29.11 |
7975 |
|
VTR US Equity |
VENTAS INC |
40.22 |
6296 |
|
AVB US Equity |
AVALONBAY COMMUN |
73.28 |
5858 |
|
HCN US Equity |
HEALTH CARE REIT |
45.03 |
5453 |
|
FRT US Equity |
FED REALTY INVS |
59.22 |
3608 |
|
DLR US Equity |
DIGITAL REALTY |
45.76 |
3484 |
|
NHP US Equity |
NATIONWIDE HLTH |
32.48 |
3467 |
|
LRY US Equity |
LIBERTY PROP |
30.83 |
3442 |
|
AMB US Equity |
AMB PROPERTY |
23.39 |
3421 |
|
SLG US Equity |
SL GREEN REALTY |
41.81 |
3212 |
|
MAC US Equity |
MACERICH CO |
30.62 |
2901 |
|
REG US Equity |
REGENCY CENTERS |
35.8 |
2874 |
|
CLI US Equity |
MACK-CALI REALTY |
32.33 |
2533 |
|
SNH US Equity |
SENIOR HOUSING |
19.8 |
2514 |
|
HPT US Equity |
HOSPITALITY PROP |
20.32 |
2506 |
|
O US Equity |
REALTY INCOME |
23.8 |
2482 |
|
ARE US Equity |
ALEXANDRIA REAL |
55.21 |
2431 |
|
WRI US Equity |
WEINGARTEN RLTY |
20.09 |
2407 |
|
CPT US Equity |
CAMDEN PROP TR |
36.71 |
2354 |
|
ESS US Equity |
ESSEX PROPERTY |
77.17 |
2176 |
|
OFC US Equity |
CORP OFFICE PROP |
36.05 |
2091 |
|
HIW US Equity |
HIGHWOODS PROP |
29.3 |
2076 |
|
TCO US Equity |
TAUBMAN CENTERS |
33.26 |
1767 |
|
NNN US Equity |
NATIONAL RETAIL |
21.07 |
1701 |
|
WRE US Equity |
WASH REAL ESTATE |
26.9 |
1567 |
|
BRE US Equity |
BRE PROPERTIES |
28.68 |
1515 |
|
SKT US Equity |
TANGER FACTORY |
37.05 |
1492 |
|
ALX US Equity |
ALEXANDER'S INC |
285.48 |
1458 |
|
ELS US Equity |
EQUITY LIFESTYLE |
46.21 |
1401 |
|
ACC US Equity |
AMERICAN CAMPUS |
26.71 |
1394 |
|
EQY US Equity |
EQUITY ONE INC |
15.77 |
1361 |
|
HME US Equity |
HOME PROPERTIES |
39.86 |
1317 |
|
OHI US Equity |
OMEGA HEALTHCARE |
15.42 |
1284 |
|
HR US Equity |
HEALTHCARE RLTY |
20.95 |
1244 |
|
MAA US Equity |
MID-AMERICA APAR |
43.57 |
1230 |
|
LHO US Equity |
LASALLE HOTEL PR |
19.36 |
1230 |
|
PSB US Equity |
PS BUSINESS PARK |
49.73 |
1210 |
|
EPR US Equity |
ENTERTAINMENT PR |
34.15 |
1194 |
|
KRC US Equity |
KILROY REALTY |
26.3 |
1135 |
|
PCH US Equity |
POTLATCH CORP |
28.31 |
1126 |
|
HTS US Equity |
HATTERAS FINANCI |
27.47 |
990 |
|
STWD US Equity |
STARWOOD PROPERT |
20.23 |
984 |
|
EGP US Equity |
EASTGROUP PROP |
37.21 |
966 |
|
SSS US Equity |
SOVRAN SELF STOR |
30.68 |
842 |
|
NHI US Equity |
NATL HEALTH INV |
30.18 |
833 |
|
PPS US Equity |
POST PROPERTIES |
16.76 |
812 |
|
DFT US Equity |
DUPONT FABROS TE |
15.46 |
645 |
|
AKR US Equity |
ACADIA REALTY |
15.88 |
630 |
|
GTY US Equity |
GETTY REALTY |
24.71 |
612 |
|
BFS US Equity |
SAUL CENTERS INC |
31.67 |
567 |
|
LTC US Equity |
LTC PROPERTIES |
23.5 |
545 |
|
AGNC US Equity |
AMERICAN CAPITAL |
28.14 |
544 |
|
GOV US Equity |
GOVERNMENT PROPE |
23.74 |
509 |
- advertisements -


All IYR prices are going up since nearly all entities now have access to refinance their worthless bonds with the FED's help. The ability to refinance allows the equity prices to move up. Liquidity is now being translated into credit to refin in both the residential and commerical real estate markets. Higher vacancies and lower rents (fundamental analysis) will not translate into lower equity values in my opinion
It really is a shame if you truly believe that. I know there are many others with that opinion. With enough "higher vacancies and sufficiently lower rents" you will achieve bankruptcy. Will that translate into lower equity values?
Dear Sir,
I have posted once since I began reading ZH about 2 weeks after it launched. This is my second post.
First, the information and the style in which you provide it is commendable. Please continue.
Second, all that matters is cash flow. The problem is that a generation of individuals has been raised believing differently. And, of course, they should believe differntly given what has transpired. But, I am sure that The Market will out in the end and cash flows will matter once again.
Regards,
RRR
Reggie, i appreciate your post, but it REALLY is not a smart idea to give this lists on ZH because a) it makes you look like you are pimping your newsletter b) can have negative consequences on ZH if people trade based on your, not so subtle, recommendations c) both ... i dont know have you seen the backlash tyler was given by some readers when they only INTERPRETED his posts a recommendations ... again i really appreciate what you do here, but you need to tone it down a little bit ...
I appreciate the way you have approached me concerning this, but:
a) I am not giving advice or recommendations
b) I have not released the shortlist to the public, I announced it
c) The list of companies above are a list of REITs from which the short list was derived. As a matter of fact, in the list above, I stated that there was a rather strong REIT, several non-real asset REITs that do not apply, etc. etc. There were absolutely no recommendations since out of 59 REITs I didn't bother to identify which was which. It would be a stretch to attempt to find which was which unless you rolled your sleeve up and actually did the work yourself, which is a good thing - but would not have anything to do with my recommnending such.
If you go back and read the post, you should see it as I have just laid it out. I didn't edit the post or change the words, either. Often, people expect to see or read something, hence they actually read what they expect to find vs. what is actually there. Buy/sell recos appear to be allowed over the web via newsletter, but I have stated often, and will state again that that is NOT what I do. I supply research and opinion, not buy and sell recommendations.
Again, although I don't concur with how you read the post I do appreciate the non-confrontation and professional manner in whcih you communicate your perspective.
Yeah, it's perfectly understandable that something with the headline "Reggie Middleton's CRE Short List" wouldn't include your short list.
"I have not released the shortlist to the public, I announced it."
Why do you think ZH readers who haven't bought one of your hundreds of sales pitches to this point would care that you've developed a "shortlist"?
I agree CB. I might add the short list IS the SRS and just buy that little bugger for $8.50 and you get the upside, minimal downside (8.5 to zero isn't much and you can always stop it out), and investment advice on ZH does have backlashes (whether advised or not). By the way CB, we are having midterms next week on previous Princeton Economics Department Heads. Hope you have your crib sheet. :)
The inverse ETFs, particularly the 2X and 3X ones, are such horrible investment vehicles that even when you're right on the direction of the index you'll usually end up losing money. On 2/1/07, the IYR (Dow Jones Real Estate) was $81.75, today it closed at $44.17, a loss of 46% not including dividends. Being short IYR would have netted a nice profit provided you weren't too leveraged and had the stomach to ride out the volatility. But shares of SRS, the 2X short Dow Jones Real Estate, were $62.07 on 2/1/07 and $8.53 at today's close for a loss of over 86%.
If IYR went down 100% tomorrow to 0 and the SRS achieved its daily mission of 2X inverse the index, SRS would close at $25.59 and the investor who bought it on 2/1/07 would still have a loss of over 58%.
Here is the short list of REITs that I have been promising subscribers for the last week: Commercial Real Estate Shortlist 11-2009 2009-11-16 04:20:04 530.98 Kb.
I'd guess your subscribers go to your website looking for your subscription content. Why are links to documents that require a subscription posted at ZH?
Which is why they weren't shortlisted.
Some of these are mortgage REITs which may not belong on your initial list, especially if they invest in agency-backed MBS. Different animal entirely from CRE!
Some of these are mortgage REITs which may not belong on your initial list, especially if they invest in agency-backed MBS. Different animal entirely from CRE!