REIT Charts

[MWM]

Commercial real Estate might be in big trouble here. I need to start watching things more closely...

https://www.bloomberg.com/news/articles/2020-06-25/commercial-real-esate-deals-plunge-to-lowest-level-since-2010

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I have not seen anything like this since 2008!

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Exodus!

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Might be go time!

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When Rates turn, I'm going to short the Hell out of these REITS!

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So Frothy!

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Rising Rates = Bad news for REITs

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Yawn of late...

[MWM]

SRS bottom looks to be in for now...

Watching the REITs, they have looked very weak!

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Breakdown?

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Rates up today and REITs go right back down, Wild1

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Treasuries up, REITs down!

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About?

[smhaque21]

I am not sure

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MALL REITS

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SBY new REIT of Interest

Silver Bay Realty Trust Corp., a publicly traded arm of Two Harbors, raised $245 million in an initial public offering last month. It rose 0.8 percent to $21.30 at 9:32 a.m. in New York, extending its 14 percent gain through yesterday since it started trading. The firm, led by Chief Executive Officer David Miller, a former Goldman Sachs Group Inc. executive and U.S. Treasury Department official, is the largest public real estate investment trust concentrating on single-family homes.
“We are seeing increased supply of rental homes as some of these big companies have moved into the space, but we’re still seeing a strong appetite as well,” said Colin Wiel, co-founder and managing director of Waypoint. “We always anticipated that prices were going to rise pretty quickly. They’ve risen quicker during the last 12 months than we would’ve guessed.”
Blackstone currently buys all of its homes with cash and then finances pools of houses with up to 60 percent debt. Conventional single-family home mortgages are financed with a 20-percent down payment.

[MWM]

Blackstone Rushes $2.5 Billion Purchase as Homes Rise
By John Gittelsohn & Heather Perlberg - Jan 9, 2013 9:35 AM ET
http://www.bloomberg.com/news/2013-01-09/blackstone-steps-up-home-buying-as-prices-jump-mortgages.html?cmpid=yhoo


Blackstone has spent more than $2.5 billion on 16,000 homes to manage as rentals, deploying capital from the $13.3 billion fund it raised last year, said Jonathan Gray, global head of real estate for the world’s largest private equity firm. That’s up from $1 billion of homes owned in October, when Blackstone Chairman Stephen Schwarzman said the company was spending $100 million a week on houses.
“The market is moving much faster than anybody thought possible,” Gray said during an interview in Blackstone’s New York headquarters. “Housing is much stronger than people anticipated.”
Blackstone is the largest investor in single-family homes to manage as rentals, acquiring properties in nine markets, from Miami to Phoenix, where prices surged 22 percent in the 12 months through October. The firm, along with Thomas Barrack’s Colony Capital LLC and Two Harbors Investment Corp. (SBY), is seeking to transform a market dominated by small investors into a new institutional asset class that JPMorgan Chase & Co. (JPM) estimates could be worth as much as $1.5 trillion.
The market, which has been “dominated by ‘Mom and Pop’ owners” could total 12 million homes and be double the size of the institutional multifamily market, JPMorgan analysts led by Anthony Paolone, wrote in a note yesterday. “A corporate structure with institutional capital around the business makes sense.”
Racing Recovery
Blackstone, which started buying the properties last year, has been racing against the real-estate recovery as prices across the U.S. rose more than economists forecast, with the areas hardest hit by the crash rebounding the most.
The S&P/Case-Shiller index of property values in 20 cities increased 4.3 percent in the 12 months through October, the biggest 12-month advance since May 2010, the group said last month in New York. Prices will gain 3.3 percent in 2013 after an estimated 4.5 percent jump last year, based on the median estimates of 15 economists and housing analysts surveyed by Bloomberg News.
Blackstone is buying in Atlanta, Chicago, Las Vegas, Phoenix, Northern and Southern California; Miami, Orlando and Tampa, Florida -- where prices fell so far that they “overshot,” said David Roth, managing director at Blackstone overseeing single-family home rentals.
‘Warehousing’ Homes
Blackstone has been purchasing through foreclosure auctions and short sales, in which banks agree to accept less than is owed on the mortgage, after more than 5 million homeowners lost their homes since the market’s peak in 2006.
It’s bought so quickly it’s “warehousing” more than half of the homes it’s acquired as it completes the purchase and hires staff and contractors to renovate and rent the properties, Gray said. It takes about 30 days to fix each home and then as much as 30 days to lease the property, he said.
“Renovating the 16,000 homes is an enormous job,” Gray said.
By comparison, D.R. Horton Inc. (DHI), the largest U.S. homebuilder by volume, sold 18,890 homes and generated $5.35 billion in revenue in fiscal 2012.
Colony Capital has bought about 5,500 homes since April, spending more than $500 million, and expects to reach $1.5 billion invested by the end of the year. Closely held Waypoint Homes said it has bought about 2,500 homes and expects to have 10,000 homes by the end of 2013.
Silver Bay
Silver Bay Realty Trust Corp., a publicly traded arm of Two Harbors, raised $245 million in an initial public offering last month. It rose 0.8 percent to $21.30 at 9:32 a.m. in New York, extending its 14 percent gain through yesterday since it started trading. The firm, led by Chief Executive Officer David Miller, a former Goldman Sachs Group Inc. executive and U.S. Treasury Department official, is the largest public real estate investment trust concentrating on single-family homes.
“We are seeing increased supply of rental homes as some of these big companies have moved into the space, but we’re still seeing a strong appetite as well,” said Colin Wiel, co-founder and managing director of Waypoint. “We always anticipated that prices were going to rise pretty quickly. They’ve risen quicker during the last 12 months than we would’ve guessed.”
Blackstone currently buys all of its homes with cash and then finances pools of houses with up to 60 percent debt. Conventional single-family home mortgages are financed with a 20-percent down payment.
Credit Line
The firm got a $600 million line of credit from Deutsche Bank AG (DBK) in October. It’s in talks with the Frankfurt-based lender to double the financing, according to two people with knowledge of the negotiations. Deutsche Bank will lead a group of banks that will contribute an additional $600 million, according to the people, who asked not to be identified because the talks are private.
Financial institutions have been slow to back single-family rental homes, because large investors have little history to demonstrate cash flows and cost of operations.
“While leverage is currently limited, potential financing options include secured credit lines, lending syndicates, high- yield debt, government sponsored enterprise-provided financing, and securitization,” Jade Rahmani, an analyst with Keefe, Bruyette & Woods Inc. in New York, wrote in a note yesterday.
Citigroup Extended
Citigroup Inc. (C) extended a $245 million line of credit to Waypoint in October, enabling the investment firm to multiply its initial $150 million in capital from GI Partners, a Menlo Park, California-based private equity fund. American Residential Properties, which has 1,500 homes in five states, received a line of credit from Wells Fargo & Co. (WFC) in June 2010. The company announced plans for an initial public offering of shares as early as the first quarter of this year, depending on market conditions.
Blackstone’s strategy in real estate generally has been to “buy, fix and sell,” said Gray, who in 2007 engineered the largest real estate buyout ever when Blackstone acquired Sam Zell’s Equity Office Properties Trust for $39 billion including assumed debt. Gray’s real estate business brought in $1 billion in profit for the firm in 2011.
In the case of the single-family business, Blackstone will rent and manage the homes through Invitation Homes, which it founded last year with Riverstone Residential Group, an apartment management company based in Dallas.
While Blackstone ultimately will benefit from the properties’ price appreciation, in the meantime, the homes will generate revenue and cash flow, Gray said.
“We’re building a real company,” he said.

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If Rates rise there will be an exodus out of REITs as well imo...

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REITs pulling back, possibly on divy taxes? or somethinng else...

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REITS even pulling back here...

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PLD I always have you on watch just in case Europe goes up in flames...

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Seepage From Europe Affects U.S. Commercial Real Estate Debt
By RANDALL W. FORSYTH
FRIDAY, OCTOBER 7, 2011

While the problems of the U.S. economy and stock market are homegrown, some of the effects of the European debt crisis have washed up on American shores in some of the more unlikely places.

U.S. commercial mortgage-backed securities -- the kind that finance office buildings, apartment houses and shopping malls, as opposed to the more familiar residential MBS that fund home loans -- have undergone a near-silent bear market since the summer.

The CMBS market has suffered a slide that might as well be a bear market, much like the high-yield corporate bond market. The flight to safety and away from risk since July has resulted in a sharp widening of their spread over Treasuries. To compensate for the perceived risk of commercial mortgages, the extra yield required on a benchmark measure, the Barclay Capital CMBS AAA Super Duper Index (you can't make up a name like that), hit a 20-month high of 323 basis points (3.23 percentage points), up sharply from 178 basis points in late April.

Notwithstanding the lack of an obvious connection, the European sovereign debt crisis has weighed on this sector of the U.S. credit market. "There is some worry that Eurozone banks will sell assets to raise capital and delever their balance sheets," write J.P. Morgan Securites analysts Edward J. Reardon, Meghan C. Kelleher and Joshua D. Younger.

"In CMBS, this concern centers on French banks, who were buyers of dollar-denominated, fixed-rate paper at the peak of the market. Though some unloaded risk during the recovery in 2009-2010, they retain substantial holdings: as of the second quarter of this year, the top five French banks by assets were reporting approximately €6.5 billion ($9.4 billion) in gross U.S. CMBS exposure -- more than 75% was Societe Generale," they write in a research note.

In that regard, the European Central Bank said Thursday it will extend its provision of unlimited liquidity to banks to help eurozone banks in need of funding that are shunned by their counterparts. The problem, of course, isn't European banks' holding of U.S. CMBS, but bonds of the problematic European governments.

This is an example of what happens during times of distress. Institutions sell their best assets to raise cash because iffy assets can't be sold or borrowed against. So, French banks sell U.S. CMBS under duress because of their holdings of Greek sovereign debt.

Most readers of this space do not deal in CMBS, but it is not completely removed from them. Real-estate investment trusts that invest in these securities have been hit as badly if not worse. Overlay a chart of Crexus Investment (ticker: CXS) with that of any number of classes of CMBX, the derivatives that chart the CMBS market, and the lines look about the same.

This serves as an example of how credit distress can leak across borders. With several degrees of separation, the Greek sovereign debt crisis is transmitted to the U.S. CMBS, via French banks as the agent of the contagion.

It's easy to see why global equity markets have reacted positively over the past few days to prospects that Europe wouldn't drag down the rest of world into a worse slump. Nearly $1 trillion was added to the value of U.S. equities in the past three days, according to Wilshire Associates.

Whether that continues is another questions as investors look into the face of earnings season, which starts in earnest next week.

[MWM]

Regional Shopping Mall Vacancies in U.S. Increase to Highest in a Decade
7 Oct 2011
Vacancies at U.S. shopping malls climbed to the highest in at least a decade as... Regional and super-regional mall vacancies rose to 9.4 percent in the three months ended Sept. 30...

http://www.bloomberg.com/news/2011-10-07/regional-shopping-mall-vacancies-in-u-s-increase-to-highest-in-a-decade.html

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REITs Getting Quietly Slaughtered
October 5, 2011, 11:40 AM ET
By A.D. Pruitt

Real estate stocks sold off across the board as investors continue to worry the recovery in commercial real estate will be side tracked by global malaise.

Among the biggest losers include apartment operator AvalonBay Communities, which fell 3.49% to $112.91, and shopping centers landord Kimco Realty, which dropped 3% to $14.36.

REITs were the worst performers on the S&P 500 Index, while the broader equities markets were relatively flat.

“It’s a bit unusual for REITs to react this negatively when the broader market is hanging in there,” says Rich Moore, an analyst at RBC Capital Markets.

Jim Sullivan, a managing director of REIT research at Green Street Advisors, said Wednesday’s declines reflect concerns among investors that Europe’s mounting debt crisis could filter down to hurt U.S. credit markets. “The direct impact is minimal, but indirectly, what we’re worried about is the impact on the U.S. banks and how that impacts the availability and cost of capital for real estate borrowers,” he said.

Real-estate stocks have outperformed the broader stock market for much of the past two years but that trend ended during the third quarter. The Dow Jones All Equity REIT Index, which tracks the stock of 130 companies, posted a negative 15% total return during the third quarter, an about-face from the second quarter when the REIT index registered a 2.9% gain.

The third-quarter return was the largest drop since the first quarter of 2009, when the index posted a negative return of 31%, and was the second time since late 2009 that REITs put in a weaker performance than the Standard & Poor’s 500-stock index.

[MWM]

Reits getting hit hard...

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Boston Properties CEO says market not clear yet; only way is lower prices


Companies:
Boston Properties, Inc. Common


On Wednesday October 5, 2011, 8:20 am

This comment from company investor conference.

[MWM]

SLG still stinking it up...

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Good read on a few reits...

http://www.fool.com/investing/general/2011/08/25/cbl-associates-dividend-dynamo-or-the-next-blowup.aspx

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SLG almost every property is in Manhattan, wondering if this Hurricane might cause some serious problems for them...

And it's been a big laggard in the sector anyways...

...

http://slgreen.com/properties/

[MWM]

PLD has a lot of exposure to Europe, probably why it is pulling back so hard...

about 1/3 of their properties ar in Europe...

[MWM]

Huge reversal here today, pain is coming for our makrets...

I'm very very long SRS calls...

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SLG chart not looking too good...

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http://seekingalpha.com/article/289040-one-more-thing-investors-need-to-know-about-reits

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I loaded a ton more SRS calls here, I think this market will close red today...

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Commercial Real Estate Endgame: $1.7 Trillion In Maturities Through 2015

David Johnson, ACM Partners|Aug. 18, 2011, 2:56 PM|240|

Urdang Capital Management has come out with a white paper, “The Great Recapitalization: Maturing Mortgage Debt Wave Creates Value Opportunities”, that is a must-read for anyone interested in the emerging trends in the U.S. commercial real estate (CRE) market.

Authors David Blum and David Rabin lay out in compelling detail the extent of the current market decline, the historic returns investors have achieved in CRE and the opportunity set for investors in the wake of a massive maturity wall.

The fall in CRE prices was swift and brutal; substantially more so than was seen in the real estate decline of the early 90s. Blum and Rabin note:

As measured by the NCREIF Property Index, property values ultimately dropped by 32% from the market peak in Q1 2008 to the bottom in Q1 2010, equal to the decline of the 1990s real estate crash but recognized in one-third of the time.

Worryingly for many in the CRE market (both investors and lenders), the recovery has been tilted heavily toward the top six U.S. markets (New York, Washington, D.C., Boston, Chicago, San Francisco, and Los Angeles).

With estimates that 60% of loans set to mature through 2015 are underwater, talk of a recovery in this market remains a cruel joke to many.

In many ways, it was the outsized success of CRE investing that laid the groundwork for the current environment of depressed prices. Note the authors:

like the increasingly distant memory of a favorite team’s championship season of days gone by, the real estate equity market never forgot those 20% + equity returns of the 1990s – and spent the next decade attempting to wring similar returns from an asset class not equipped to produce them.

The level of risk-taking in the 00s that naturally flowed from a combination of chasing abnormally high returns and an accommodating credit market not surprisingly led to the excesses that have gotten us to our current situation.

Blum and Rabin believe that a relative stabilization of the CRE market and a change in FDIC orientation toward workouts will prompt lenders to more aggressively seek long-term solutions to their troubled credits. The authors observe:

With banks increasingly willing to negotiate and CMBS delinquencies at an all-time high, we believe that there will be increasing opportunities to purchase or recapitalize over-leveraged assets, as ‘extend and pretend’ gives way to ‘put up or shut up’.

A fact too often lost on investors is that abnormal returns generally flow from abnormal situations. With an opportunity to acquire properties at a significantly lower cost basis, investors now are presented with just such an abnormal situation. Blum and Rabin lay out the competitive advantage that investors can seize by investing in this market:

basis disparity – and the inherent competitive advantage that it creates – makes it possible for today’s purchasers to add value to properties even as rental rates are flat or declining. We believe adding value to low basis properties will be the operational cornerstone of real estate investment performance over the next several years.

And

The reset basis at which distressed properties are acquired enables the news ownership to invest capital to cure deferred maintenance needs and upgrade systems and finishes while offering lower rental rates than comparable properties with greater debt burdens – a critical competitive advantage in periods of weak demand.

Fear and uncertainty is the friend of the distressed investor. With lenders increasingly willing to press for a long-term solution to troubled CRE loans, and a $1.7 trillion maturity wall looming, motivated sellers are assured. Aggressive investors have an opportunity to earn outsized returns by avoiding trophy markets and acquiring properties at a cost basis that allows for robust profitability irrespective of the weak job growth the U.S. is likely to experience in the coming years.


Read more: http://www.businessinsider.com/commercial-real-estate-endgame-17-trillion-in-maturities-through-2015-2011-8#ixzz1VaTzqKuu

[MWM]

David Rosenberg<>12 bullet points confirming the double dip is here

Challenger layoffs have surged 80% in the past three months. That will lead to higher jobless claims in the near-term.

Consumer buying intentions for big-ticket items has sagged to recession levels. Watch the savings rate in the next six months — this will be key to the macro outlook.

Productivity has declined for two straight quarters and actually, unless companies wilfully want their margins to implode, will soon respond by shedding labour input.

This already goes down as the weakest recovery on record despite unprecedented policy stimulus. Every dollar of balance sheet expansion at the Fed and the Treasury since the beginning of 2009 has generated 80 cents of incremental GDP gains. Not only is that a pitiful multiplier but now that there is no more stimulus, it is a legitimate question as to how an economy that only operated on policy steroids for the past two-and-change years is going to perform.

There is no doubt that the economy is not yet contracting, but the debate is whether it will start to by year-end. The withdrawal of stimulus is feeling like a policy tightening. And after coming off a mere 0.8% annual rate of gain in GDP so far this year, the question is how the financial shock since mid-year in the form of higher debt levels and equity cost of capital is going to impact an already near-stagnant economy.

The data on a three-month basis are following a classic pre-recession pattern and so is the stock market. Only three times in the past did the S&P 500 go down as much as it has without a recession ensuing. Market signals are important and this is what most economists missed in 2007. The 5-year note yield at 0.93% is a tell-tale sign — and is negative in real terms. Even with the speculative grade default rate falling in July to 2.3% from 1.9%, spreads are 150 basis points wider now than they were a month ago.

Do these economists realize that S&P financials are down 25% from this year’s highs? Can they explain how this fits into their forecast? The economy can hardly grow without credit unless it receives ongoing doses of government support, which for now is no longer forthcoming. The bank stocks are down more from their early highs than they were from January to August 2007 when the downturn was right around the corner.

In plain-vanilla manufacturing inventory cycles, recessions are typically separated by five years, sometimes even longer as we saw in the 1980s and 1990s. But in a balance sheet/deleveraging cycle, recessions come more quickly — every two-to-three years. That puts late 2011/early 2012 in the spotlight. The imbalances in housing and debt were not fully resolved in the last recession, unfortunately enough (there is a nifty article on page A2 of today’s WSJ, which cites Zillow research showing that only one-third of the 130 housing markets across the country can be considered “undervalued”). In a vivid sign that housing is no longer responsive to interest rates; mortgage applications for new purchases cratered 10.1% in the August 12th week. They have declined now for three of the past four weeks and are at the lowest level since July 2010.

In a sign that households are concentrating more on getting their financial conditions into better shape than making that additional debt-financed purchase, the rate of late credit card payments fell to a 17-year low in the second quarter. Of course that is good news for the future, but going on a diet is never easy over the intermediate term (take it from me). The U.S. consumer is on a debt-reduction plan, having taken the aggregate level of liabilities down $50 billion in Q2. If we’re not mistaken, Wal-Mart had some pretty cautious things to say about the U.S. consumer yesterday and we see that Dell, having missed its estimates today, also discussed that it is seeing a lack of “confidence” in “both corporate and household sectors” and “uncertain demand” as it cut its guidance for the year.

Core Europe is stagnating and the Asian economy is cooling off. The Q2 contraction in Hong Kong GDP was the canary in the coal mine; Chinese industrial production contracted 0.4% MoM (based on a seasonally adjusted basis calculated by Haver Ana lytics) in July as well. We always said that Korea is important to watch because of its global export exposure, and with this in mind we recommend that you read Global Woes Land a Punch in Korea on page C5 of the WSJ. This bodes ill for the U.S. export sector. Also take note that the sharp slowing in core Europe is spreading through the entire continent — have a look at Slowdown Spreads to Central Europe on page 3 of today’s FT.

We have to understand that recessions are part of the business cycle. There is no reason to be fearful. Just be prepared. Hedge funds that are long high- quality, non-cyclical companies with strong balance sheets and dividend growth and yield attributes while being short small-caps that are highly cyclical and expensive is a money-making strategy in a recession. Hybrids with low equity correlations and BB-like yields, corporate bonds in defensivesectors with a visible cash-flow stream and a pervasive focus on energy, raw food, and gold — that is the ideal portfolio in an environment like this (as far as the food theme is concerned, go to page Cl of the WSJ and have a read of Chinese Hunger for Corn Stretches Farm Belt).


Finally, if you’re looking for the next shoe to drop, it may very well be in U.S. commercial real estate. We highly urge that you have a look at REITs Losing Haven Appeal on page C6 of the WSJ as well as Buyers Wary of Building Bubble on Cl (institutional investors are starting to back away from what appears to be an oversupplied and overpriced commercial property market in several major cities).

[MWM]

Two REITs Unveil Share Offerings, Pushing Their Stocks Lower
AUGUST 17, 2011, 5:18 P.M. ET.
DOW JONES NEWSWIRES

Two real-estate investment trusts--Invesco Mortgage Capital Inc. (IVR) and AvalonBay Communities Inc. (AVB)--separately announced plans to offer common shares, pushing their stocks lower in after-hours trading.

Invesco shares fell 4.7% to $18.39 after hours, while AvalonBay stock was 3.4% lower at $129.

Their offering announcements follow one of the most tumultuous weeks for equities in history. Last week, the Dow Jones Industrial Average swung between huge gains and losses because of uncertainty about the strength of the U.S. economy and Europe's debt crisis.

Invesco, a unit of investment manager Invesco Ltd. (IVZ), said it planned to offer 20 million shares of common stock, which would boost its total outstanding by about 21%. It will grand an addition 3 million shares to cover overallotments. The REIT, which focuses on financing and managing residential and commercial mortgage-backed securities and loans, said it planned to use proceeds to acquire more of those products. Invesco has made several other share offerings in the last year.

AvalonBay, an upscale-apartment owner and builder, said it would offer 4.8 million shares of stock as part of its current shelf registration. That would increase its number outstanding by 5.3%.

[MWM]

Nice blog here on the REITS...

http://xiphostrading.tumblr.com/post/8341642318/real-estate-reits-a-double-dip-will-crush-them

[MWM]

Just bought my SRS $20 Oct calls for 1.22. I think that is crazy cheap imo considering the way this sucker can pop...

I like the risk/reward here...

[MWM]

Have the REITS already broken down?

Libor rate is sneaking up...

[MWM]

Remember SRS?

The Jan $20 calls are near $1...

Heck of a hedge if one is needed...

[MWM]

back

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I'm

[MWM]

Ibox very interesting, a lot of REITs have rebounded but a few are lagging...

Here is an example of a Laggart...

http://investorshub.advfn.com/boards/board.aspx?board_id=6930

[BurrTim]

http://www.netdocketsblog.com/2010/07/four-more-lembi-groupcitiapartments.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+Netdockets+(netDockets+Corporate+Restructuring+and+Bankruptcy+Blog)#axzz0uPXIic4l

[MWM]

CT right back up again today...

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BEE still going!

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.40

[TallRob0]

howmuch?

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Big divy on her too!