REITs

REITs
Tyler Durden's picture

Goldman Forecast On CRE REITs: "Flat To Down 15%"





It is sad that modern capital markets have gotten to a point when neither fundamental nor technical analysis matters. The only question is how many dollars with the Federal Reserve print tomorrow and how higher will that push stocks. For those deluded amongst you who still believe 10,000x EV/EBITDA is marginally to quite-marginally rich, and don't feel like chasing trends and passing the hot potato to the latest Down syndrome afflicted E-Trade client, here are some observations on arguably the most overbought (by a metric mile) sector, REITs, courtesy of masters of the (metric) universe, Goldman Sachs.

 
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More On Substantive Consolidation Of REITs And Other Bankruptcy Issues Facing REITs





"Many of the issues that are cropping up in the ongoing wave of REIT and real estate restructurings
and bankruptcies are novel, and many of the issues that arise in bankruptcy in the
ordinary course have not been previously applied to the complex real estate financing structures
created in recent years. It is important to appreciate, but not to exaggerate, the hazards now facing
both lenders and borrowers." - Wachtell Lipton

 
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Raymond James Discusses "Growthyness" Of REITs





RJ analyst Paul Puryear creates new words to describe his enthusiasm. Objectivity and OED butchering ensues, and even Mark Haynes is confused.

 
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"Bankrupt" Jefferson County Did Not Buy REITs Today, Summons National Guard To Maintain Order





Oddly enough, Jefferson county which got into a dash of trouble buying some interest rate swap or another without reading the prospectus which despite guaranteeing perpetual appreciation distinctly said in the invisible print that total loss of principal is another side effect of transacting with Wall Street, has apparently been unable to participate in today's 175/75 L/S unwind which blew the REITs into the stratosphere and got Bob Pisani's panties in a bunch.

 
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Merrill On REITs: "Just First Of Several Rounds Of Follow Ons"





Straight from the horse's mouth, viewers can gleen the most "unbiased" perspective on the strength of the REIT market, who the investors are who are so happy to throw their money on the REIT equity offering bandwagon, and just how many more waves (after waves) of follow ons can be expected.

Compliments of Ron Sturzenegger, MD and Global Head of Real Estate, Gaming and Lodging and Jeff Horowitz, Managing Director & Head of Americas Real Estate And Loding, both at Merrill/BofA.

 
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The Latest Spin On Collapsing REITs And Taxpayer Subsidies





The PPIP is all but dead. But don't tell that to perma-CRE-bull Barry Sternlicht. The owner of such debacles as iStar (last time we checked the all time worst name in the IG11 index) and RevPar plummeting hotel chain Starwood hotels, is hoping to raise brand spanking new capital via an IPO for, of all things, a new REIT - Starwood Properties Trust, and use taxpayer money to buy other bankrupt hotels.

 
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Jonathan Litt Pessimistic On REITs





Jonathan Litt, formerly a top rated REIT analyst with Paine Webber and Solly, has some words of caution for all investors who can't wait to part with their cash and invest in ghost town malls, foreclosing multi-apartment buildings, unretnable offices with a 0.5x DSCR and 10%-full Vegas hotels. Ironically, this comes from a CNBC interview.

 
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Goldman Expects Large Drop In Rents; REITs Impacted





In a research piece titled "REITs Cutting Residential Rents, Setting Stage for Further CPI Disinflation" Goldman Sachs analysts conclude that based on recent declining rent trends from residential REITs, the impact on price levels in the housing market (especially in major metropolitan centers where rent are only just now starting to unravel) will get progressively adverse, but will also feed ongoing general asset deflationary pressures, and by implication, added weakness to REIT cash flow. From Goldman:

 
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Merrill: "Retail REITs - Tough But Stabilizing"





In his first note released in the post Sakwa world, Craig Schmidt continues to attempt to restore confidence in retail REITs. It would, after all, seem prudent to bang clients' heads into their desks until they see the light at the end of the tunnel (oncoming bullet train?) at a time when the only cash, and equity value, REITs can create is by raising expensive, dilutive equity in order to repay the cheapest form of capital (that of secured loans previously held by Mr. Schmidt uber parent, Bank of America).

 
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Michael Mauer Leaves Citi For Carl Icahn, Who Hates REITs





Michael Mauer, head of Citi's leveraged syndicate has left the TARP-laden firm to join hedge fund Icahn Associates. Mauer, who was hired in 2001, had previously worked at JP Morgan where he ran the syndicated loan business before the JPM-Chase merger. Mauer's departure comes as Icahn's hedge fund is focusing more on distressed debt opportunities.

 
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GS: 2009 Outlook: Bearish On CRE; REITs Could Re-test Recent Lows





Goldman has been really pounding the REIT space. Which, of course, skeptics will say simply means their prop desk (or what is left of it) is buying REIT assets hand over fist. Or maybe they just really hate the space.

 
Tyler Durden's picture

GS: 2009 Outlook: Bearish On CRE; REITs Could Re-test Recent Lows





Goldman has been really pounding the REIT space. Which, of course, skeptics will say simply means their prop desk (or what is left of it) is buying REIT assets hand over fist. Or maybe they just really hate the space.

 
Tyler Durden's picture

REITs Continue The Dividend Trap





If only companies knew they would be rewarded with aggressive buying of their stock after reducing and/or PIKing cash dividends they likely would have done so much, much sooner... After all why would investors demands cash out of "dividend stocks." This little trick however has not escaped REITs Mack-Cali and Simon Properties. CLI announced after market close today that it would be reducing its dividend by 30%, from $2.56 to $1.80 (a 30% reduction) and would pay the quarterly dividend of $0.45 on April 13 with an ex-div date of April 3.

 
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Much More Pain Ahead For REITs





Zero Hedge has written much about this so no comments here. Good article from Bloomberg summarizing the upcoming pain. Some salient quotes:

 
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Yet More REITs Conserving Cash





REIT Simon Property Group announced results of its dividend election today, which for all practical purposes could be called anything but an "election." The final outcome is that shareholders will receive a dividend of $0.90/share consisting virtually entirely of stock (90%) and the balance in cash.

 
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