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Prologis - >>> Warehouse Giant Seeing Insatiable Demand From Amazon, Walmart
Bloomberg
By Natalie Wong
May 5, 2020
https://www.bloomberg.com/news/articles/2020-05-05/warehouse-giant-seeing-insatiable-demand-from-amazon-walmart
Prologis Inc., the largest owner of warehouses in the U.S., is getting a boost as social-distancing pushes consumers deeper into the embrace of e-commerce.
Companies including Amazon.com Inc. and Walmart Inc. have an “almost insatiable” appetite for more warehouse space, Chief Executive Officer Hamid Moghadam said in an interview on Tuesday.
“We’re not seeing those guys slow down, they continue to be very active in making new deals,” Moghadam said. “The strong continue to be taking a lot of space.”
Prologis and Blackstone Group Inc. have gobbled up warehouses in recent years, betting in part that more and more shopping will move online. Still, e-commerce is a relatively a small piece of the warehouse business, which is more tightly tethered to the overall economy.
Even as the pandemic fuels job losses and batters the economy, the surge in online shopping, including for groceries, is keeping vacancy rates low at Prologis properties.
The company has grown rapidly through acquisitions, but Moghadam doesn’t see buying many opportunities amid the current turmoil.
“I don’t expect anywhere near the kind of opportunities that came in other cycles,” he said. “I don’t expect fire sales.”
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>>> Cell Tower REITs: 5G's True Killer App
Seeking Alpha
Apr. 22, 2019
https://seekingalpha.com/article/4255831-cell-tower-reits-5gs-true-killer-app
Summary
With 5G on the horizon, Cell Tower REITs have outperformed the broader real estate sector in each of the past four years. 5G technology will fundamentally disrupt the communications sector.
The true “killer app” for 5G will be fixed wireless broadband internet. Dense small cell networks will allow carriers to deliver fiber-like speeds without the last-mile wires into each home.
The technological limitations of 5G – notably the very small coverage area per antenna – mean that 5G small cell networks will complement, not replace, macro cell tower networks.
The Sprint/T-Mobile merger saga continues. Just when a deal appeared imminent, a new curveball emerges. We think that Sprint’s troubles are overstated and that no-deal outcome would benefit tower REITs.
Cell tower REITs continue to benefit from a favorable competitive positioning within the telecommunication sector. Concentrated ownership and strong demand have translated into substantial pricing power for cell tower operators.
This idea was discussed in more depth with members of my private investing community,iREIT on Alpha.
REIT Rankings: Cell Towers
In our REIT Rankings series, we introduce and update readers to each of the commercial and residential real estate sectors. We analyze REITs within the sectors based on both common and unique valuation metrics, presenting investors with numerous options that fit their own investing style and risk/return objectives. We update these rankings every quarter with new developments.
cell tower REIT overview
We encourage readers to follow our Seeking Alpha page (click "Follow" at the top) to continue to stay up to date on our REIT rankings, weekly recaps, and analysis on the REIT and broader real estate sector.
Cell Tower Sector Overview
Cell tower REITs comprise roughly 10% of the REIT ETFs (VNQ and IYR). Within the Hoya Capital Cell Tower REIT Index, we track the three cell tower REITs which account for roughly $160 billion in market value: American Tower (AMT), Crown Castle (CCI), and SBA Communications (SBAC). Cell tower REITs are on the "growth" side of the real estate spectrum and generally pay a low dividend yield but have achieved some of the highest internal and external growth rates across the real estate sector over the past decade. Investors seeking focused but diversified exposure to this sector should consider the Benchmark Data & Infrastructure Real Estate ETF (SRVR).
cell tower REITs
More than any other real estate sector, cell tower ownership is highly concentrated. Cell tower REITs own roughly 50-80% of the 100-150k investment-grade macro cell towers in the United States. For this reason, while cell towers may constitute only a tiny portion of total real estate asset value in the United States, they constitute a disproportionally high importance in the market capitalization-weighted investible real estate indexes and in fact, American Tower and Crown Castle are the two single largest REITs. Strong performance from cell tower REITs over the past two years have explained much of the underperformance of the traditional "core" real estate sectors.
cell tower REIT overview
Consumers want both speed and mobility, but because of the physics and economics of data transmission, there is often a tradeoff between the two. For pure speed and low-latency, a robust fiber-based or dense 5G small-cell network is ideal. This requires laying thousands of miles of underground cables and/or having hundreds of thousands of small-cell base stations using high-band spectrum. For pure mobility, a wide-reaching macro cellular network using high-powered transmitters at lower and farther-reaching spectrum is ideal. This requires having a network of macro towers, but each tower is capable of servicing tens of thousands of devices each, rather than several dozen or hundreds of customer per small-cell antenna.
cell tower networks
Since consumers need both speed and mobility and none of the players are able to fully satisfy both of these needs, a blend of different technologies- including macro cell networks- will continue to be used to meet the growing demand for data connectivity. It’s important to note that both AMT and SBAC have significant international operations, while CCI is a pure-play US operator. AMT and SBAC focus on the macro tower business, while CCI has made significant investments in fiber and small-cell networks in addition to their primary tower business.
Bull & Bear Thesis for Cell Tower REITs
Our research continues to indicate that macro cell towers provide the most economical mix of coverage and capacity, and recent challenges with dense small-cell network deployment have affirmed our belief that macro towers will continue to be the "hub" of next-generation networks for the foreseeable future. While communications technology does change very rapidly, it appears that the physical and economic limitations of the alternative technologies (low-orbit satellites, wide-spread small cell networks, and outdoor Wifi) are unlikely to abate anytime soon and the risk of technological obsolescence in the 5G-era is often overstated.
5G vs. 4G
Cell tower REITs continue to command strong competitive positioning in the telecommunications sector. Cell carriers sold off their tower assets beginning in the mid-2000s to de-lever their balance sheet and free-up capital to expand their networks. Supply growth is almost non-existent in the US as there are significant barriers to entry through the local permitting process. The relative scarcity of cell towers, combined with the absolute necessity of these towers for cell networks, has given these REITs substantial pricing power. While cell carriers have tried to make moves to establish leverage over tower owners by building or acquiring towers themselves, carriers have limited available capital to spend on these initiatives, especially in light of the capital-intensive 5G rollout.
bullish cell towers
The four-year run of strong performance, however, has pushed cell tower REIT valuations to elevated levels compared with the rest of the real estate sector. The land under cell towers, of course, is worth very little without a functioning macro cell site. While we don’t believe there is an immediate risk of technological obsolesce, it is impossible to predict technological innovation in a decade, much less over multiple decades. Further, there are only four major players in the US carrier industry (and potentially three if the Sprint /T-Mobile merger gets approved), limiting the number of potential tenants for these REITs. Carriers are incentivized to invest capital in alternative technologies like small-cells and DAS to try to reduce the competitive position of cell towers. Perhaps the most significant risk relates to the fact that these REITs own just 30% of the land under their structures and lease the other 70% through (typically long-term) ground leases.
bearish cell towers 2019
Potential Outcomes of Sprint/T-Mobile Deal
The cell tower REIT industry continues to await the outcome of the Sprint/T-Mobile merger, which has the potential to alter the competitive dynamics within the telecommunications space. Earlier this year, the third and fourth largest US wireless carriers announced a long-awaited merger agreement that would consolidate the industry into three nearly-equal competitors along with AT&T (NYSE:T) and Verizon (NYSE:VZ). Following years of discussions and a failed attempt at a merger in 2014 that was blocked by US regulators, the two firms finally came to terms on the potential $26-billion deal. The combined entity would command a roughly 35% share of total retail wireless connections, including 25% of postpaid phone subscribers and nearly 60% of prepaid phone subscribers.
While revenues from Sprint (NYSE:S) and T-Mobile (NASDAQ:TMUS) comprise a combined 26% of total industry revenues, the “overlap” between Sprint and T-Mobile cell tower sites is roughly 4% of total industry revenues. This 4% represents a "worst-case-scenario" in which T-Mobile completely shuts down the Sprint network on redundant towers and does not subsequently need to upgrade their equipment to handle the increased capacity. Crown Castle, which is US-focused, would be most affected, while American Tower, which has a significant international presence, would be relatively unscathed.
Last week, The Wall Street Journal reported that the Department of Justice informed T-Mobile and Sprint that the deal is “unlikely to be approved as currently structured.” The general consensus among analysts is that the odds of approval have now decreased from above 75% late last year to below 50% currently. As we discussed during our last update, we believe that the merger approval will likely hinge on the regulator's assessment of the likelihood and forecast of four key unknown factors, ranked in order of importance.
1) Can Sprint survive without a merger?
2) Would Sprint have other suitors (cable companies, tech companies)?
3) Would a merger help or hurt the growth of 5G?
4) Is wireless broadband a competitor to the home broadband providers?
Given the uncertain answers to these four questions and a wide range of permutations of possible outcomes, analysts are generally split as to whether cell tower REIT investors should be rooting for or against the potential merger. Our assessment is that cell tower REITs would ultimately benefit from a no-deal outcome, but that the downside risk is more significant if Sprint were to indeed fail as a result. We outline our assessment through an analysis of the three possible outcomes.
Scenario 1: Merger Approved
The cellular carrier industry would be consolidated into three players of roughly equal size. With more balance sheet capacity, the merged T-Mobile would likely ramp up network spending in line with Verizon and AT&T, which would translate into an immediate boost to cell tower REIT revenues. With one less competitor, the 5G rollout begins sooner but is focused on higher-value markets and consumer pricing would likely become less competitive, translating into higher margins for carriers, but potentially fueling further network investment. Over time, however, the competitive positioning of cell tower REITs would be diminished. Carrier initiatives to gain leverage over cell tower REITs, including building their own towers or taking over leases from REITs, would be incrementally more successful and growth would moderate but remain at above-inflation levels due to the still-favorable competitive positioning of cell tower REITs.
Probability: 50%. For Cell Tower REITs: Decent/Default Outcome.
Scenario 2: Merger Rejected. Sprint Finds Third-Party Partner
The merger gets rejected, but Sprint's underpriced and valuable network and spectrum assets are attractive to cable broadband providers (Comcast (NASDAQ:CMCSA), Charter Altice) who recognize the mounting and legitimate threat from 5G fixed wireless broadband, which we believe to be underappreciated by the market. Alternatively, a cash-flush technology company (Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG) (NASDAQ:GOOGL), or Microsoft (NASDAQ:MSFT)) sees the assets as an underpriced compliment to their existing data center infrastructure and a new source of distribution to mitigate the competitive threats from the incumbent broadband providers. Sprint is able to leverage this partnership to become a legitimate competitor in the space. Meanwhile, T-Mobile continues its strong run of adding customers at sector-leading rates. The carrier industry remains at four players with T-Mobile and Sprint close behind and consumer pricing competition remains intense. The four carriers battle to become leaders in 5G and access is widespread. Initiatives to gain leverage over cell tower REITs are largely unsuccessful and pricing power remains strong.
Probability 35%. For Cell Tower REITs: Best Outcome.
Scenario 3: Merger Rejected. Sprint Fails
The merger gets rejected Sprint is unable to find a suitable partner. Sprint's investors, including SoftBank (OTCPK:SFTBY), scale back their investment and the network falls further behind the other three carriers and continues to lose customers until being unable to operate any longer. In bankruptcy, Sprint's assets are distributed around the telecom sector including to AT&T and Verizon, further strengthening their grip on the emerging duopoly. T-Mobile's strong run of performance slows down and cannot keep up with the network spending of the two major players without the complementary asset of Sprint. The carrier industry becomes a de-facto duopoly and cell tower REIT competitive positioning is significantly diminished. Consumer pricing becomes significantly less competitive and the 5G rollout continues but is isolated only to the most high-margin deployments. Carrier initiatives to gain leverage over tower REITs are largely successful and the industry becomes more akin to the data center REIT sector over the past several years with below-inflation internal growth rates and weak pricing power over increasingly dominant tenants.
Probability 15%. For Cell Tower REITs: Worst Outcome.
Recent Cell Tower REIT Fundamental Performance
2018 was another strong year for the cell tower sector as the early effects of network densification to fuel 5G networks powered above-trend organic growth. Organic tower revenue, effectively the same-store NOI equivalent, continues to grow at a sector-leading 6%+ rate as carriers continue to invest heavily in network densification and equipment upgrades. With the high degree of operating leverage inherent with the co-location tower model, tower REITs are seeing amplified benefits increased network spending.
cell tower REIT AFFO
These REITs are forecasting an average 8% rise in AFFO per share in 2019, among the strongest rates of growth in the real estate sector. Along with robust organic growth, external growth via strategic acquisitions remains a central focus of cell tower REITs, aided by the cost of capital advantage enjoyed by these firms. As we'll discuss shortly, cell tower REITs trade at an estimated 30-50% premium to private market-implied net asset values, meaning that external acquisitions, though somewhat limited, are easily accretive to earnings.
REIT tower sites
The combination of strong organic growth and continued external growth fueled a 16% rise in total property revenues in 2018, rising from the 13% rate achieved in 2017, boosted by the effects of Crown Castle's merger with small-cell operator Lightower. While appearing to be very conservative, these REITs offered guidance that projects a 5% rise in property revenues in 2019.
Carrier Performance & Capital Spending
Cell tower REITs are inexorably linked with the underlying performance of their cell carrier tenants, who delivered another very strong year. AT&T, Verizon, T-Mobile, and Sprint combined to add more than 4.5 million post-paid wireless customers in 2018, a sharp increase from the 3.8 million added in 2017, and the strongest year ever for cell carriers. Pricing remains highly competitive with customers effectively seeing an average 3% drop in their phone bills.
cell carrier pricing
Capital spending by cell carriers is a key driver of growth for tower REITs. Capex among US carriers had been in a lull for the past two years as much of the available capital has been put towards spectrum acquisition which will power the next generation 5G networks. Capital spending is expected to ramp up again as carriers begin to deploy 5G networks over the next five to ten years.
network spending cell
Recent & Long-Term Stock Performance
Since NAREIT began tracking the sector in 2012, cell tower REITs have outperformed the REIT index in every year besides 2014. Cell towers continue to be one of the few remaining growth engines of the REIT sector and, considering the positive operating environment forecast for 2018-2020, don't appear to be slowing down anytime soon.
REIT sectors
The good times have continued for the cell tower REIT sector this year despite the merger uncertainties. The Hoya Capital Cell Tower REIT Index has gained more than 19% this year compared to a 14% gain in the broader REIT index. Receding interest rates and signs of moderating global growth have lifted REIT valuations across the sector following the worst year since the recession.
cell tower REIT performance
American Tower has led the way over the last two years, followed by SBA Communications. Investors remain somewhat skeptical on the economic returns from Crown Castle's significant investment in fiber and small cells over the last several years, explaining some of the underperformance since 2016.
cell tower REIT stocks
Valuation of Cell Tower REITs
Strong performance over the past four years has pushed cell tower REIT valuations towards the most expensive end of the real estate sector. Cell towers trade at a sizable Free Cash Flow premium (aka AFFO, FAD, CAD) to the REIT average, but after accounting for the sector-leading expected growth rates, cell tower REITs very quite attractively valued based on the FCF/G metric. As discussed above, cell tower REITs trade at some of the widest NAV premiums in the real estate sector, giving these companies the "cheap" equity capital to fuel further external growth.
cell tower REIT valuation
Cell Tower REIT Dividend Yield
Cell tower REITs are among the lowest-yielding REIT sectors, paying out just 53% of their free cash flow and instead of plowing that capital back into the business to fuel external growth. The sector pays an average 2.2% dividend yield, among the lowest among REITs.
cell tower REIT dividend yield
Within the sector, only Crown Castle acts like a typical REIT when it comes to distributions. CCI pays a healthy 3.7% dividend yield, while AMT pays 1.9%, and SBAC does not yet pay a dividend.
cell tower dividends
Cell Tower REITs & Interest Rates
Cell tower REITs skew towards the "growth" side of the real estate sector, reacting more to economic growth expectations than to changes in interest rates. Among US REIT sectors, cell towers are the third least interest rate sensitive sector and could provide balance to an otherwise rate-sensitive REIT portfolio.
REITs interest rates
Within the sector, AMT and SBAC are classified as Growth REITs. CCI, which pays a 4% dividend, is a Hybrid REIT and has characteristics that are more aligned with the REIT averages.
interest rates REITs
Bottom Line: Wireless Broadband is 5G's Killer App
With 5G on the horizon, Cell Tower REITs have outperformed the broader real estate sector in each of the past four years. 5G technology will fundamentally disrupt the telecommunications industry. We believe that the true “killer app” for 5G will be fixed wireless broadband internet, as dense small cell networks will allow carriers to deliver fiber-like speeds without the wires.
The technological limitations of 5G – notably the small coverage area – mean that macro towers will continue to be the primary hub of cellular networks. Network densification drives cell tower revenues. The Sprint/T-Mobile merger saga continues. Just when a deal appeared imminent, a new curveball emerges. We think that Sprint’s troubles are overstated and that no-deal outcome would benefit tower REITs.
Cell tower REITs continue to benefit from a favorable competitive positioning within the telecommunication sector. Low supply and high demand have translated into substantial pricing power for cell tower operators. We analyzed the three potential merger outcomes and believe that a no-deal scenario would be the best-case scenario for these companies. This analysis, however, is contingent upon our view that wireless broadband does indeed become the "killer app" of 5G and that Sprint is a valuable partner or acquisition target from a third-party (cable or technology) company as a result.
The risk of a no-deal outcome is that the carrier industry devolves into an effective duopoly, which would translate into significant downside risk to the competitive positioning of the cell tower REIT sector. The success of the early 5G fixed wireless broadband tests in a handful of US cities will be closely monitored by all players in the industry and the ultimate fate of Sprint may hinge on its relative success. If wireless broadband is indeed the 5G "killer app" we think it could be, the future looks bright for cell tower REITs and carriers alike.
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>>> Here's Why You Should Buy SBA Communications (SBAC) Stock Now
Zacks Equity Research
April 17, 2020
https://finance.yahoo.com/news/heres-why-buy-sba-communications-144102324.html
It seems to be a wise decision to add SBA Communications Corporation SBAC, given its efforts to extend business in select international markets with high growth characteristics. Moreover, amid growing demand for data volume and deployment of 5G network, wireless carriers are expanding and enhancing their networks. These positive trends are expected to drive demand for the company’s communications infrastructure assets.
SBA Communications is expected to witness year-over-year growth in funds from operations (FFO) per share in 2020. The company also beat estimates in the last four reported quarter, the average positive surprise being 2.8%.
Its price performance also seems impressive. In fact, this Zacks Rank #2 (Buy) stock has gained 28.1% in the year-to-date period against the industry’s decline of 13.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, SBA Communications has a number of other aspects that make it a solid investment choice.
Why the Stock is an Attractive Pick
Favorable industry tailwinds: Mobile subscriber growth has significantly boosted the wireless tower industry. Next-generation 4G LTE networks and increased usage of smartphones and tablets are creating impressive demand for the company’s site leasing business. With increasing smartphone adoption, greater broadband demand and plans for 4G service worldwide, the company is set to pursue international wireless infrastructure opportunities. Furthermore, wireless consumer demand is expected to considerably increase in the upcoming years supported by innovation and accelerated adoption of data-driven mobile devices and applications such as machine-to-machine connections, social networking and streaming of video.SBA Communications’ extensive infrastructure portfolio is well-positioned to meet such demands.
Encouraging FFO picture: SBA Communications’ projected FFO growth rate is 10.3% for 2020. This is higher than the industry average of 0.5%. Further, management expects 2020 AFFO per share in the range of $9.07-$9.47.
Strategic Portfolio Expansion: With decent presence in the United Sates and its territories, SBA Communications has developed or acquired thousands of towers throughout Central and South America and across Canada over the years. Presently, the company continues to expand its tower portfolio and seek new growth opportunities. Supported by strong industry fundamentals, the company is identifying international markets with high growth characteristics and extending its business in these regions. In fact, during the December-end quarter, it acquired 1,336 communication sites for a total cash consideration of $471.7 million.
Encouraging Dividend Payout: Solid dividend payouts remain the biggest attraction for REIT investors, and SBA Communications is boosting shareholder wealth through dividend hikes. Specifically, concurrent with its fourth-quarter 2019 earnings release, the company announced a quarterly cash dividend of 46.5 cents on its Class A common stock, indicating a 25.7% hike from its October-December quarter payout. Given the company’s financial position compared with the industry’s, this dividend rate is anticipated to be sustainable.
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Interesting. As for European real estate market, there is current downturn in property prices for property in Germany https://tranio.com/germany/ etc. Developed countries like Germany, France or the USA have already taken extensive and effective measures to curb the spread of the pandemic. As reported by CNBC, the outbreak in China is under control and economic activity is slowly recovering.
Interesting. As for European real estate market, there is current downturn in property prices for property in Germany https://tranio.com/germany/ etc. Developed countries like Germany, France or the USA have already taken extensive and effective measures to curb the spread of the pandemic. As reported by CNBC, the outbreak in China is under control and economic activity is slowly recovering.
>>> Beware the Big Price Tag for a Mall REIT With Roots in Sears
Barron's
By Bill Alpert
March 6, 2020
https://www.barrons.com/articles/beware-the-big-price-tag-for-a-mall-reit-with-roots-in-sears-51583548833?siteid=yhoof2&yptr=yahoo
Real estate was the ace in the hole in Eddie Lampert’s investment strategy for Sears Holdings. So in 2015—a decade after the hedge fund manager’s ESL Investments took over the struggling retail chain— Sears spun off its interests in some 260 shopping mall properties into a real estate investment trust called Seritage Growth Properties.
Before that year was out, Berkshire Hathaway CEO Warren Buffett used his own money to buy a 7% stake in Seritage (SRG) for about $35 a share. The stock hit $57 the next year amid enthusiasm that Seritage would replace the bargain rents paid by Sears with market-rate tenants. The real estate play looked like a winner to Barron’s in early 2017.
But Sears was still Seritage’s main tenant. When Sears Holdings (SHLDQ) filed for bankruptcy protection in 2018, the retailer still filled 70% of Seritage’s space.
Seritage stock now goes for about $31 a share. That prices the enterprise at $3 billion and, by most measures, values Seritage on a par with the better mall REITs. Looking closely at Seritage’s recent results, it is hard to understand why its stock deserves that generosity. Seritage and Lampert declined our requests for comment, while Buffett didn’t respond to our query.
After Sears’ bankruptcy, the chain vacated over 200 Seritage properties. Its contribution to the REIT’s rental income has dropped to 5% of the total. Revenue at Seritage in 2019 was $169 million, down sharply from the 2016 level of $250 million. Its net loss in 2019 was $64 million, or 1.77 cents a share. REITs use an operating cash-flow measure called funds from operations, or FFO, and that number sank at Seritage from a positive $16 million in 2018 to a negative $34 million in 2019, or minus 61 cents a share. It pays no dividends on its common stock.
The red ink will be about as deep this year, Wall Street says. One has to look to 2021 to find a positive forecast for Seritage funds from operations. The sole analyst polled by FactSet projects about $20 million in FFO for next year, or 38 cents a share, on revenue of $260 million. That means today’s stock price for Seritage is 80 times next year’s forecast for FFO.
By way of comparison, the classiest of the class-A mall operators, Simon Property Group (SPG)—at its current stock price of $119—trades for just nine times the consensus forecast for 2021 funds from operations. Macerich (MAC) trades for six times. A well-regarded shopping center REIT, such as Regency Centers (REG), trades for 15 times next year’s FFO.
Malls are a forlorn sector these days, but even in its unhappy class, Seritage stands out for how many of its properties stand vacant. The company’s annual report makes painful reading, with a six-page list of wholly owned properties studded with empty malls in towns like Burnsville, Minn., and Lebanon, Pa. In all, only 43% of Seritage’s 29 million square feet of space was leased at the end of December. At Simon Property, 95% of retail space was occupied.
A main theme in the Seritage strategy has been the re-leasing of Sears locations to new tenants, at rents several-fold higher. But many retail tenants are struggling, these days. In addition to the 6% of its rent roll still paid by Sears and Kmart at year end, Seritage’s top tenants included the arcade chain Dave & Buster’s Entertainment (PLAY), the At Home Group (HOME) furnishings chain, and the clothing discounter Burlington Stores (BURL)—totaling 18% of the REIT’s annual rent and all causing angst in their own investors lately, amid faltering revenue.
Seritage’s other strategy is to redevelop its retail space and parking lots as fitness centers, restaurants, medical offices, or multifamily dwellings. In recent visits with investors, Seritage executives called attention to mixed-use projects near Seattle, Dallas, and Chicago that will together cost over $325 million in just the initial phase.
The REIT has good reason for staying in touch with institutional investors. Seritage has some remaining credit facilities, but without operating cash flow, it will have to fund its billions of dollars worth of redevelopment ambitions by selling off property and by selling stock. So shareholders should brace for dilution.
Meanwhile, if you’ve got a clever use for an empty Sears store, give Seritage a call.
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Buffett - >>> Seritage Growth Properties (SRG) is a publicly-traded, self-administered and self-managed REIT with 184 wholly-owned properties and 28 joint venture properties totaling approximately 33.4 million square feet of space across 44 states and Puerto Rico. The Company was formed to unlock the underlying real estate value of a high-quality retail portfolio it acquired from Sears Holdings in July 2015. The Company's mission is to create and own revitalized shopping, dining, entertainment and mixed-use destinations that provide enriched experiences for consumers and local communities, and create long-term value for our shareholders. <<<
>>> Real Estate Billionaire Barrack Says Commercial Mortgages on Brink of Collapse
Bloomberg
By Erik Schatzker
March 22, 2020
https://www.bloomberg.com/news/articles/2020-03-22/colony-s-barrack-says-commercial-mortgages-on-brink-of-collapse?srnd=premium
Warns of cascade of margin calls, foreclosures, bank failures
White paper calls for banks, government to coordinate relief
Real estate billionaire Tom Barrack said the U.S. commercial-mortgage market is on the brink of collapse and predicted a “domino effect” of catastrophic economic consequences if banks and government don’t take prompt action to keep borrowers from defaulting.
Barrack, chairman and chief executive officer of Colony Capital Inc., warns in a white paper of a chain reaction of margin calls, mass foreclosures, evictions and, potentially, bank failures due to the coronavirus pandemic and consequent shutdown of much of the U.S. economy. The paper was posted late Sunday on online publishing platform Medium.
“Loan repayment demands are likely to escalate on a systemic level, triggering a domino effect of borrower defaults that will swiftly and severely impact the broad range of stakeholders in the entire real estate market, including property and home owners, landlords, developers, hotel operators and their respective tenants and employees,” he wrote.
Barrack said the impact could dwarf that of the Great Depression.
Rescue Plan
Specifically, his paper highlights the fragility of mortgage real estate investment trusts, or REITs, and credit funds and the lenders that provide them with liquidity via repurchase financing. He argues for a rescue plan coordinated by banks and supported by government that includes the following:
$500 billion of taxpayer funds to provide liquidity to the financial system, including for loans and repurchase contract
Temporary suspensions of both mark-to-market accounting and certain loan-modification rules
Delaying until 2024 a new accounting rule governing the recognition of credit losses
Leeway for banks to provide loan forbearance without triggering bank-capital rule violations
Barrack, a longtime friend of President Donald Trump, has much at stake in the outcome. Most of Colony’s investments are in or connected to real estate. The Los Angeles-based firm’s year-end financial report lists $3.54 billion of assets in hospitality real estate and $725 million of debt and equity investments at Colony Credit Real Estate Inc., its publicly traded commercial mortgage REIT.
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>>> Commercial real estate booms in cannabis-friendly states
Yahoo Finance
Sarah Paynter
February 12, 2020
https://finance.yahoo.com/news/commercial-real-estate-booms-in-cannabisfriendly-states-164314252.html
Investors are buying up warehouses and retail space in cannabis-friendly states.
In a reversal from 2018 trends, cannabis investors are buying up commercial property, particularly warehouses, in states where recreational cannabis use has been legalized for more than three years, according to a new study by the National Association of Realtors, based on a September 2019 survey of over 600 commercial brokers in states like Colorado, where recreational cannabis use is legalized, and in states, like Florida, where medical marijuana use is legal.
The U.S. has a patchwork of marijuana legalization laws by state, despite federal laws against the drug. Graphic by the National Association of Realtors.
“It is very important to understand the supply and demand, and the regulatory dynamic, in each state. Focusing on states with higher barriers to entry makes a license more valuable and makes that real estate more valuable,” said Katie Barthmaier, chief executive officer of Green Acreage, a cannabis-focused real estate investment trust.
Warehouse demand increased in 42% of the markets with longstanding (over three years) recreational legalization, and 34% of markets that legalized recreational use since 2016 also saw increased demand from the previous year. Only 18% of markets without recreational marijuana legalization claimed warehouse demand growth.
In 2018, warehouse demand in states with only medical use outpaced demand in states with recreational use, 34% to 27%, respectively, according to last year’s study.
In a reversal from 2018 trends, cannabis investors are buying up commercial property in states where recreational cannabis use has been legalized for more than three years. Graphic by the National Association of Realtors.
“In states that have a longstanding legal [cannabis] industry, warehouses have especially been of interest to commercial investors. That increased demand, I suspect is not just for storage but for growing,” said Dr. Jessica Lautz, vice president of demographics and behavioral insights for the National Association of Realtors.
Meanwhile, demand for retail space increased in 27% of longstanding recreation-friendly markets (before 2016), compared to 19% of recently-legalized markets or 18% of prescription-only markets. The trend is a reversal from 2018, when storefronts saw greater growth in medical use-only markets than in markets with recreational use.
“Investors knew folks would need space to cultivate and manufacture cannabis. A lot of unused space was rented up and bought by investors,” said Jack Nichols, general counsel and chief operating officer of Harborside, a Calif.-based marijuana company. Nichols said that cannabis investor interest has inflated real estate prices as demand for commercial space grows.
Cannabis companies are held back
Because cannabis companies cannot turn to traditional banks, buying or leasing property can be difficult. Financing is usually supplied by specialized venture capitalists, private real estate investment funds and publicly-traded companies.
“On the investment side, banks cannot loan you money, insurance companies cannot deal with you and few funds can enter the space. There is no institutional capital in the space,” said Ori Bytton, founder of California-based real estate management company for cannabis operators, WeGrow CA, and founder and chief executive officer of Natura Life + Science, the largest vertically-integrated grow and processing facility in California.
Cannabis companies say that investor-driven capital offers loans at high interest rates and with hefty restrictions.
“Everybody thinks cannabis is the most profitable business, and they try to take advantage of it… They all wanted me to personally put up my house as a guarantee on a lease… It’s egregious,” said Heidi Adams, chief marketing officer at Calif.-based Henry’s Original cannabis company, which she said searched a year and a half before finding a “reasonable” lease.
Restrictions could soon lift, however, if the Senate passes the SAFE Banking Act, which would give cannabis companies access to traditional banking. The act was passed by the U.S. House of Representatives in September 2019.
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>>> Pacer Benchmark Industrial Real Estate SCTR ETF (INDS)
Expense Ratio: 0.6%
https://investorplace.com/2019/02/5-of-the-best-thematic-etfs-to-consider/
Some of the best ETFs provide access to the real estate sector and do so in unique fashion. The Pacer Benchmark Industrial Real Estate SCTR ETF (NYSEARCA:INDS) hails from a family of unique, thematic ETFs with real estate exposure. INDS offers exposure to one of the real estate industry’s most compelling growth segments.
Industrial real estate investment trusts (REITs), including those residing in INDS, own facilities and warehouses used to store goods for the e-commerce boom. Industrial REITs are “important because investing in this space is a roundabout way to play the e-commerce sector without exposure to volatile and expensive retail equities like Amazon, Walmart and more,” according to Pacer.
INDS is beating the largest U.S. REIT ETF by nearly 360 basis points this years and this thematic ETF, which will be one year old in May, does not skimp on yield, as highlighted by a 30-day SEC yield of 3%.
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>>>2 Investments To 'Load Up' Before The Recession
Nov. 28, 2019
Jussi Askola
REITs, real estate, research analyst
https://seekingalpha.com/article/4308392-2-investments-load-up-recession
Summary
The investment world is faced with an unprecedented challenge: both stocks and bonds have simultaneously become overvalued and risky.
Investors are quickly seeking refuge in real assets such as commercial properties, pipelines, farmland, airports, timberland, and other.
While investing in real assets may have been reserved to high net worth individuals in the past, today there exists a lot of publicly-traded alternatives.
Below we present 2 of our favorite real assets and explain why their cash flows are resilient to recessions.
Looking for a portfolio of ideas like this one? Members of High Yield Landlord get exclusive access to our model portfolio. Get started today »
Investors are today faced with a big challenge:
"There is nothing interesting to buy."
On one hand, stocks are trading at a 30% premium to historical averages – despite slowing growth in a late cycle economy:
And on the other hand, bonds pay historically low interest rates that may not even cover inflation in the long run.
This creates two major problems to investors:
Stocks: With high valuations in a late cycle, risks are very high and investors could suffer significant capital losses from a return to historic valuation multiples.
Bonds: Not enough income is earned to meet investor's immediate needs. This is particularly dangerous to large institutions and retirees.
What is then the solution to deal with these challenges?
Our preferred strategy is to invest in Real Assets. Commercial properties, farmland, timberland, energy pipelines and other similar real assets are the only remaining investments that can still provide high income and inflation protection – without taking an enormous amount of risk.
These are not just the empty words of a Seeking Alpha author. Over the past 10 years, institutional capital in the real asset space has grown by $30 trillion. Yes that’s trillion with a “t”. Over the coming 10 years, another $50 trillion is expected to shift to real asset investments.
real asset allocations on the rise
Stocks and bonds are not providing the needed returns and professional investors are quickly changing portfolio allocations. By 2030, the allocations to real assets are expected to reach up to 40% of intuitions portfolios:
So far, individual investors have been slow to react. With poorer access to research and no expertise in real asset investing, individual investors continue to overexpose themselves to the risks of owning traditional stocks and bonds.
Fortunately, you do not need to be a multi-billion-dollar institution to invest in real assets. At High Yield Landlord, we specialize in liquid alternatives to gain exposure to high yielding real assets. This includes REITs, MLPs, Utilities, and other listed infrastructure companies.
If you've read until here, we want to share with you two of our "Top Picks" among high-yielding REIT opportunities. These two REITs are particularly well-positioned in today’s late cycle economy because of their more defensive nature, steady cash flow growth, and high level of dividend security.
INVESTMENT #1 – Medical Properties Trust (MPW)
MPW is our one and only Healthcare REIT investment at the moment.
The Buy Thesis in 3 Bullet Points:
Superior Cap Rates: Most REITs compete for properties in the 5-7% cap rate range. MPW is able to target greater cap rates at closer to 8% by specializing in hospitals - a property type that is mostly ignored by the investment community.
Resilience in Late Cycle: People need hospitals - regardless of economic conditions. MPW's tenants are healthy and enjoy strong rent coverage ratios. If we were to go into a recession tomorrow, we would expect the cash flow to remain stable - allowing it to pay a sustainable 5.3% dividend yield.
Strong Acquisition Pipeline: As the only "pure-play" Hospital REIT, MPW enjoys valuable relationships with operators to conduct sale and leaseback transactions. With a strong acquisition pipeline and the capital to fund it, we expect 5-8% annual growth in the coming years.
You can read our full investment thesis here:
Investing In Hospitals: Recession Resilience, High Growth, And 5.6% Yield
Recap of 3rd Quarter Results:
This company is doing absolutely amazing:
It beat on FFO and revenue expectations. It also reaffirmed its full year guidance – which it already boosted during the last quarter.
The CEO talks about a “record-breaking year” with “monumental results”. This is because year-to-date, the company has grown its assets by 40%!
Its new acquisitions are done at ~8% cap rates – which results in immediately accretive growth.
They note that they have a pipeline of up to $5 billion for transactions in the coming quarters. The company is not slowing down.
The investment story was already strong in MPW, but with these new acquisitions, the story is only getting better. We also love the recent expansion to more global markets including the UK and Switzerland which have very favorable demographics for hospitals. With such healthy spreads, and defensive properties, we believe that MPW is a near certain future outperformer. If the share price remains around $20 per share, we will buy more shares in the near term.
INVESTMENT #2 – EPR Properties (EPR)
EPR Properties (EPR) is one of our oldest investments. We invested heavily when it traded at mid-$50 and have a large capital gain at $77 today. To this day, it remains our Favorite net lease REIT investment idea.
The Buy Thesis in 3 Bullet Points:
Alpha-Rich Strategy: EPR targets specialty net lease assets that are ignored by most other investors. These include movie theaters, golf complexes, ski resorts, and other entertainment assets. They come with greater cap rates, longer leases, and higher rent increases.
History of Successful Execution: EPR has historically been a massive outperformer and everything points out to further outperformance in the long run.
Simple Story: The company beats its peers on all fronts. It pays a higher yield (6%), it grows faster (5-8%), and it has more upside potential due to its discounted multiple (14x FFO).
You can read our full investment thesis here:
A New Opportunity Has Emerged In EPR Properties
Recap of 3rd Quarter Results:
EPR has a long history of consistently beating expectations and surprising to the upside. The last quarter was no different:
It beat FFO and revenue expectations for the quarter. It also boosted its full year guidance.
It invested $118 million in new properties over the past 3 months alone. A big portion went into golf complexes such as the one illustrated above.
EPR is currently enjoying historically high spreads on its new investments and the guidance for further acquisitions is very strong.
EPR also issued $500 million in senior unsecured notes with a 10-year term at a 3.75% interest rate during the quarter. This cheap capital was used to refinance its previous notes that were yielding 5.75%.
The dividend is up by 4.2% as compared to same quarter last year.
We expect another dividend increase sometime in the coming quarters, likely in early 2020. We are very bullish and recently upgraded EPR into a Strong Buy. The discount to peers is historically high and the company is stronger than ever before. We expect ~15% upside from repricing to a higher FFO multiple and 5-8% annual FFO growth. Add to that a 6% dividend yield, and you have a recipe for consistent and predictable outperformance.
It's by targeting this type of defensive, yet undervalued REITs that we aim to outperform in today's volatile and uncertain environment.
As of today, our Core Portfolio has a 7.4% dividend yield with a conservative 68% payout ratio. Beyond the dividends, the core holdings are trading substantially below intrinsic value at just 9.2x Cash Flow - providing both margin of safety and capital appreciation potential.
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>>> EPR Properties (EPR) is a specialty real estate investment trust (REIT) that invests in properties in select market segments which require unique industry knowledge, while offering the potential for stable and attractive returns. Our total investments are nearly $7.2 billion and our primary investment segments are Entertainment, Recreation and Education. We adhere to rigorous underwriting and investing criteria centered on key industry and property level cash flow standards. We believe our focused niche approach provides a competitive advantage, and the potential for higher growth and better yields. <<<
>>> Medical Properties Trust, Inc. (MPW) is a self-advised real estate investment trust formed to acquire and develop net-leased hospital facilities. The Company's financing model facilitates acquisitions and recapitalizations and allows operators of hospitals to unlock the value of their real estate assets to fund facility improvements, technology upgrades and other investments in operations. <<<
>>> California Bans Private Prisons, Immigrant Detention Centers
Newly signed law will force federal government to shut down four facilities for migrants in state
Bloomberg
By Alejandro Lazo in Sacramento, Calif., and Michelle Hackman in Washington
Oct. 11, 2019
https://www.wsj.com/articles/california-bans-private-prisons-immigrant-detention-centers-11570820873
California will work to end the use of private prisons within its borders, including for-profit immigrant detention facilities, under a law signed Friday by Gov. Gavin Newsom.
The measure, originally focused only on prisons, was expanded late in the legislative session this year to include jails that hold migrants, as they became a polarizing political issue in left-leaning California.
The new law prohibits the state from entering into or renewing contracts with private prison companies after Jan. 1 and bans their use by the state after Jan. 1, 2028. It also forbids the operation of private facilities contracted by the federal government to hold migrants in California starting next year, or whenever their current contracts expire.
“During my inaugural address, I vowed to end private prisons, because they contribute to over-incarceration, including those that incarcerate California inmates and those that detain immigrants and asylum seekers,” Mr. Newsom said in a statement. “These for-profit prisons do not reflect our values.”
An analysis earlier this year by the state Senate said the Trump administration would likely challenge the law but concluded California would likely prevail in court. A Federal Bureau of Prisons spokeswoman declined to comment.
A spokesman for Immigration and Customs Enforcement, which oversees detention centers for adult migrants, said once the law goes into effect, the agency would move detainees currently in California to facilities elsewhere in the country.
Four large detention centers could be shut down by the new law. All are operated by private prison companies, which have seen increased business from the Trump administration’s stepped-up immigration enforcement and now account for the bulk of migrant detentions in the state of California.
Two of those facilities are run by GEO Group Inc., while CoreCivic Inc. and the Management and Training Corp. run the other two. A GEO Group spokeswoman said she believed most or all of the new law will be found unconstitutional by a court. CoreCivic said the state’s ban conflicts with its stated goal to reduce prison overcrowding. A spokesman for MTC said the company provides “a valuable service to our customers and a safe and humane environment for those in our care.”
ICE detention centers will again be in the spotlight this fall as some liberal members of Congress and activists plan to inject a demand to defund the agency into federal spending talks. Activists also hope California’s ban will spur similar action in other states.
“It’s going to really set an example for other communities,” said Alejandra Pablos, an activist and Mexican national who traveled to Sacramento from Tucson last month to attend a rally in support of the law. “People are going to recognize that this could be done.”
In 2017, California passed a law blocking local governments and law enforcement from making new contracts or expanding existing contracts with the federal government to detain undocumented immigrants.
Despite those efforts, ICE in April said it was seeking to expand its capacity in the state by 5,600 detainees, according to public documents. Currently ICE has a total capacity in California of about 4,000 beds, which represents less than 10% of the agency’s national detention capacity, a spokeswoman said.
In the 2018 fiscal year that ended Sept. 30, 396,448 people were booked into ICE detention facilities, some of which are operated privately. That is 22.5% more than during the previous 12 months, according to the Department of Homeland Security.
Three other states, New York, Illinois and Iowa, have prohibited their prison systems from using private facilities. In addition, Illinois earlier this year passed a law aimed at halting a proposed detention center in Dwight, Ill., effectively banning for-profit detention centers there. New York and Iowa laws don’t ban such facilities.
The law marks a rapid shift for California, which until recently relied on private prison operators to help relieve overcrowding in state facilities. California currently has four private prisons under contract, all run by the GEO Group, which house about 1,400 of the state’s 125,000 inmates.
The GEO Group’s prison contracts with the state run through 2023, and can’t be renewed under the new law except under a possible court order to relieve overcrowding.
Some experts question whether the law will go as far as intended in light of the court-order exemption and other exceptions in the law.
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>>> Prologis, Inc. (PLD) is the global leader in logistics real estate with a focus on high-barrier, high-growth markets. As of June 30, 2019, the company owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total approximately 786 million square feet (73 million square meters) in 19 countries. Prologis leases modern distribution facilities to a diverse base of approximately 5,100 customers principally across two major categories: business-to-business and retail/online fulfillment. <<<
LTC Properties (LTC) - >>> 3 Monthly Dividend Stocks to Buy Today
by Aaron Levitt
InvestorPlace
June 21, 2019
https://finance.yahoo.com/news/3-monthly-dividend-stocks-buy-185123145.html
Retirement: It’s all about one thing and that’s income … replacing a steady paycheck with your savings. With that, dividend stocks have plenty of appeal for retirees. Not only can you score higher yields than bonds, but you have the ability to grow those payouts over time as well. However, dividend stocks do have one major drawback.
Their payment schedules.
Most dividend stocks pay on a quarterly or even semi-annual basis. And while that may not seem like a problem, for many retirees used to a monthly or bi-weekly paycheck balancing cash flows can be a hard pill to swallow. After all, your mortgage, cable bill and car payments are due each month. To that end, getting a monthly dividend could be the answer to budgeting issues.
Luckily, there are plenty of dividend stocks that do happen to payout monthly. Here are three of the best.
Main Street Capital Corp (MAIN)
Dividend Yield: 5.89%
Most investors have never heard of businesses development companies (BDCs). That’s a shame because they can be some of the biggest yielding stocks around. BDCs are set up as pass-through entities much like real estate investment trusts, and similarly must pay out at least 90% of their earnings as dividends. How they earn that income is by loaning cash to mid-sized firms — companies too big to ask the local bank for a loan, but not big enough to launch a significant bond offering — at competitive rates. The best way to really think of them is like public-private equity firms.
And when it comes to BDCs, Main Street Capital (NASDAQ:MAIN) could be one of the best.
MAIN has provided capital to more than 200 private companies and thanks to its underwriting and deal standards, it has been very successful at turning a big profit on those loans. Just for the first quarter of this year, MAIN has already seen its investment income rise by 10% year-over-year. Those sorts of gains have allowed the firm to become a great dividend stock since its IPO in 2007. The BDC has managed to grow its payout by 127% since then.
Today, you can score a great recurring monthly dividend with a current yield of 5.89%. The best part is that MAIN’s management likes to reward shareholders further with extra supplemental dividends. This allows the BDC to use excess capital if a great deal can be had or for dividends. Adding those extra payouts in, and investors are looking at closer to 7.2% yield.
BDCs like MAIN provide a much-needed service to many firms. And thanks to its underwriting skill and focus on quality firms, MAIN has quickly become one heck of a dividend stock.
Shaw Communications (SJR)
Dividend Yield: 4.5%
One sector that can be a fertile hunting ground for dividend stocks, and is also known for its stability, is the telecommunications industry. Top stocks like AT&T (NYSE:T) and Verizon (NYSE:VZ) are in plenty of income portfolios. The reason is easy to see. Predictable fixed costs and demand allow telcos to pay out reliably healthy dividends. The problem is T and VZ aren’t monthly dividend stocks.
But Canada’s Shaw Communications (NYSE:SJR) is.
Shaw remains one of Canada’s largest telecoms and offers the usual bundle of services, including cable, internet and wireless phone services. It has been doing this for decades just like T and VZ here at home. And SJR has also tackled the problem of cord cutting head on. The telecom has been able to successfully convert customers to faster internet service to overcome lower cable subscriptions. This has helped boost revenues. At the same time, SJR has been one of the first movers in Canada for new 5G networks. That will give it a heads-up in bringing faster mobile internet, IoT and other applications to the nation.
As Shaw moves forward in these areas, investors can sit back and collect a hefty monthly yield. Currently, SJR pays 4.5%. Now, that dividend will fluctuate based on changes to the U.S./Canadian dollar. However, given Shaw’s stability and potential growth, it’s a small price to pay for a great dividend stock.
LTC Properties (LTC)
Dividend Yield: 4.89%
Honing in on so-called mega-trends is a great way to find dividend stocks that will stand the test of time. For monthly-dividend payer LTC Properties (NYSE:LTC) that mega-trend is the “Graying of America.”
Thanks to advances in medicine, lifespans are only increasing and longevity is almost assured at this point. LTC is uniquely positioned to take advantage of this fact. The firm invests in the senior housing and assisted living facility sectors of the healthcare property market. Currently, the firm owns/invests in roughly 200 properties that are right in the sweet spot for the nation’s aging baby boomers. Demand for these facilities continues to grow as more seniors need aid to get along.
The key is that LTC doesn’t operate the facilities or even own the buildings in many cases. What it does is provide financing for owner/operators to construct and renovate their properties or it buys properties from owners in a sale-leaseback transaction. It’s basically a mortgage lender that collects a monthly rent check. This position in the sector allows it to avoid some of the profitability issues that can result in senior living and assisted living facilities.
It also allows for some safety and steady profits on its end. Year-over-year, LTC saw a gain in FFO for the first quarter of 2019. Steady FFO gains have allowed it to raise its dividend over 46% since 2008. Currently, LTC yields 4.89%.
All in all, LTC is in the right area at the right time. And that makes it a great monthly dividend stock to own.
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>>> CareTrust REIT, Inc. is a self-administered, publicly-traded real estate investment trust engaged in the ownership, acquisition and leasing of seniors housing and healthcare-related properties. With 212 net-leased healthcare properties and three operated seniors housing properties in 28 states, CareTrust is pursuing opportunities across the nation to acquire properties that will be leased to a diverse group of local, regional and national seniors housing operators, healthcare services providers, and other healthcare-related businesses.
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>>> More trouble for malls: A new wave of closures from Gap, Victoria's Secret and others
11-30-18
CNBC
https://www.msn.com/en-us/money/topstocks/more-trouble-for-malls-a-new-wave-of-closures-from-gap-victorias-secret-and-others/ar-BBQgr3j?li=BBnb7Kz&ocid=mailsignout
Mall and shopping center owners across the U.S. are preparing to be hit by more store closures, following a brutal year that included department store chains like Bon-Ton and Sears going bankrupt, Toys R Us liquidating and even Walmart shutting dozens of its club stores.
Now, a slew of specialty retailers like Gap and L Brands are getting serious about downsizing, which will leave more vacant storefronts within malls until landlords are able to replace tenants.
And if retailers are not shutting stores, the focus is on negotiating with landlords over how to cut rent and other expenses. Real estate analysts say it's the retailers, not the mall and shopping center owners, that still have the upper hand in most negotiations today.
"Our early read on 2019 is more of the same ... with both malls and [shopping centers] facing another year of tepid earnings growth and store closure-related headwinds," Mizuho analyst Haendel St. Juste said.
Related video: Malls compete for shoppers from e-commerce ahead of holidays
The CEO of clothing retailer Express, David Kornberg, told analysts Thursday morning the company is "benefiting from reduced occupancy costs, which are expected to continue based on recent lease negotiations."
Express has 60 percent of its leases up for renewal over the next three years, and will be in a position to argue for slashed rents because of that, he said. Express currently has more than 600 stores, including outlets, across the U.S. and Puerto Rico.
The comments come after Gap earlier this month warned it could shut hundreds of stores for its namesake brand "quickly" and "aggressively."
"There are hundreds of other stores that likely don't fit our vision for the future of Gap brand specialty store, whether in terms of profitability, customer experience, traffic trends," CEO Art Peck said.
Then, L Brands CFO Stuart Burgdoerfer told analysts earlier in November the company is going to "take a hard look" at its real estate "over the next several months." He said L Brands hasn't had much flexibility to shut stores of late, without incurring a penalty, as leases in the U.S. typically last for 10 years, and can be 15 years in the U.K. But he hinted the company hopes to take a more aggressive stance, moving forward.
"We're doing some more purposed testing for Victoria's [Secret] around closing some stores that may not be as obvious financially, but really observing the sales transfer effects," Burgdoerfer said. Victoria's Secret has been viewed as dragging down Bath & Body Works, which is also owned by L Brands and is seeing improved sales trends for its lotions and candles as its stores are being remodeled.
Bucking the trend, Abercrombie & Fitch said Thursday morning it plans to close fewer stores this year than it previously anticipated, based on a regained momentum of its apparel business. It's now planning to shut just 40 locations in malls, compared with a prior target of 60. But it also still has 60 percent of its leases expiring by 2020, giving the company more flexibility in the coming months to ink better deals with property owners. Abercrombie currently has more than 850 stores globally, including those under the Hollister banner.
"I would say, we retain a lot of flexibility with our leases ... based on lease expiration," CEO Fran Horowitz told CNBC. "We work with our landlords. We negotiate with them."
All things considered, U.S. mall owners like Simon, Macerich, Taubman, Seritage, Brookfield and Unibail-Rodamco-Westfield must look for new ways to fill these gaps, as there aren't many retailers today opening new stores at the same size and scale as before the Great Recession.
Some are turning to co-working spaces, apartment complexes and health facilities to replace department stores. Others are building spaces that house multiple e-commerce brands on a rotating basis. There's a wave of digital brands like Casper, Warby Parker and Untuckit opening bricks-and-mortar locations.
"We continue to believe that we're still in the earlier stages of the reshaping of the retail landscape and facing a challenging backdrop marked by defensive landlords/weak pricing power, more anticipated store closures, and selective capital," St. Juste said.
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>>> Mortgages fast approaching 5 percent, a fresh blow to housing market
Wall St Journal
10-11-18
https://www.msn.com/en-us/money/realestate/mortgages-fast-approaching-5-percent-a-fresh-blow-to-housing-market/ar-BBOeBHg
Mortgage rates hit their highest level in more than seven years this week at nearly 5%, a level that could deter many home buyers and represents another setback for the slumping housing market.
The average rate for a 30-year fixed-rate mortgage rose to 4.9%—the largest weekly jump in about two years—according to data released Thursday by mortgage-finance giant Freddie Mac.
Lenders and real-estate agents say that, even now, all but the most qualified buyers making large down payments face borrowing rates of 5%.
Rates have been edging higher in recent months, but during “the last week we’ve seen an explosion higher in mortgage rates,” said Rodney Anderson, a mortgage lender in the Dallas area.
A 5% mortgage rate isn’t that high by historic standards. During much of the decade before the financial crisis, these rates hovered between 5% and 7%. But a return to more normal lending rates won’t feel normal to many buyers who have become accustomed to getting a mortgage loan at 4% or lower, and they could experience sticker shock at what they would have to pay now for a home loan.
“There’s almost a generation that has been used to seeing 3% or 4% rates that’s now seeing 5% rates,” said Vishal Garg, founder and chief executive of Better Mortgage.
For a house with a $250,000 mortgage, rates of 5% add about $150 to the monthly payments compared with the rate of 4% that borrowers could have had less than a year ago, according to LendingTree Inc., an online loan information site. That excludes taxes and insurance.
With rates hitting recent highs at a time when housing prices have been going up, too, some economists suggest sellers may need to lower prices if borrowers can’t afford high prices in a higher rate environment.
Higher mortgage rates have also slowed the housing market more than many expected. That’s a potentially troubling sign for the broader economy, since housing is often a bellwether for how rising interest rates could affect growth overall.
Many buyers who are struggling to find a home they can afford because of high prices are more sensitive to rising rates than they have been in the past.
Existing home sales fell in August from a year earlier, the sixth straight month of declines. Many would-be buyers sat out the buying season because of high housing prices, a historic shortage of homes to buy, and a tax bill that reduced some incentives for homeownership. Higher mortgage rates will likely compound their hesitation.
“With the escalation of prices, it could be that borrowers are running out of breath,” said Sam Khater, chief economist at Freddie Mac.
Once-hot markets are showing signs of cooling down. Bill Nelson, president of Your Home Free, a Dallas-based real-estate brokerage, said that in the neighborhoods where he works, the number of homes experiencing price cuts is more than double the number that are going into contract.
Brad and Virginia Reitinger closed on a new home in Dallas two weeks ago, and opted for an adjustable-rate mortgage so they could get a 4% rate. With a fixed-rate 30-year loan, they would have had to pay 4.5% to 5%, Mr. Reitinger said.
He added that the prospect of rates going even higher motivated them to move quickly on buying the new home. And if they had opted for a fixed-rate mortgage, he estimates, their monthly payment would have been higher by a couple hundred dollars. “When you run the numbers, it makes a big difference,” he said.
Adjustable-rate mortgages, which reset to market rates after a certain number of years, typically offer lower rates than fixed-rate mortgages at the beginning of their term. Some lenders say they have seen a surge of customer inquiries into the product as rates rise. They remain a relatively small part of the mortgage market, though: They made up about 12% of mortgage originations in the second quarter, according to industry research group Inside Mortgage Finance.
The rise in rates could have far-reaching effects for the mortgage industry. Some lenders—particularly nonbanks that don’t have other lines of business —could take on riskier customers to keep up their level of loan volume, or be forced to sell themselves. Many U.S. mortgage lenders, including some of the biggest players, didn’t exist a decade ago and only know a low-rate environment.
Long-term mortgage rates now have climbed nearly a full percentage point from 3.95% at the beginning of this year. House hunters who started searching months ago are acutely aware of the rise in rates.
“We have some people who prepared themselves early, and bless their heart for doing it—that’s what I’ve been preaching,” said Rick Bechtel, head of U.S. mortgage banking at TD Bank. “And they’re the ones who are most pained.”
A spate of recent positive economic news helped drive the 10-year Treasury note, to which mortgage rates are closely tied, to a seven-year high last week. The Federal Reserve, which has raised its key policy rate three times this year, is expected to do so again in December.
And higher rates will likely kill off any lingering possibility of a refinancing boom, which bailed out the mortgage industry in the years right after the 2008 financial crisis. If rates hit 5%, the pool of homeowners who would qualify for and benefit from a refinance will shrink to 1.55 million, according to mortgage-data and technology firm Black Knight Inc. That would be down about 64% since the start of the year, and the smallest pool since 2008.
Higher rates will be hardest on first-time buyers, who tend to make smaller down payments than older buyers who have built up equity in their previous homes, and middle-income buyers, who can least afford the extra cost. Mr. Khater said that about 45% of the loans that Freddie Mac is backing are to first-time buyers, up from about 30% normally, which also means that rising rates could have an even bigger impact on the market than usual.
“Affordability has already been an issue for consumers across the country,” said Sanjiv Das, CEO of Caliber Home Loans Inc., one of the biggest mortgage lenders in the country. “Now it becomes an even bigger issue.”
>>>
>>> Why Realty Income Corp. (O) is a Great Dividend Stock Right Now
Zacks Equity Research
October 5, 2018
https://finance.yahoo.com/news/why-realty-income-corp-o-131501911.html
Why Realty Income Corp. (O) is a Great Dividend Stock Right Now
Dividends are one of the best benefits to being a shareholder, but finding a great dividend stock is no easy task. Does Realty Income Corp. (O) have what it takes? Let's find out.
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Realty Income Corp. In Focus
Realty Income Corp. (O) is headquartered in San Diego, and is in the Finance sector. The stock has seen a price change of -0.84% since the start of the year. The real estate investment trust is paying out a dividend of $0.66 per share at the moment, with a dividend yield of 4.68% compared to the REIT and Equity Trust - Retail industry's yield of 5.07% and the S&P 500's yield of 1.81%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.65 is up 4.5% from last year. Over the last 5 years, Realty Income Corp. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.70%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Realty Income Corp.'s current payout ratio is 85%, meaning it paid out 85% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, O expects solid earnings growth. The Zacks Consensus Estimate for 2018 is $3.18 per share, with earnings expected to increase 3.92% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, O presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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>>> Equinix, Inc. (Nasdaq: EQIX) connects the world's leading businesses to their customers, employees and partners inside the most-interconnected data centers. In 52 markets across five continents, Equinix is where companies come together to realize new opportunities and accelerate their business, IT and cloud strategies. <<<
https://finance.yahoo.com/quote/EQIX/profile?p=EQIX
Equinix EQIX, -0.62% runs data centers in the U.S., Japan and Europe, providing cloud services to more than 9,800 companies.
>>> Is the REIT bloodbath finally a buying opportunity?
By Andrea Riquier
Apr 2, 2018
Malls are a ‘distressed’ play for some investors, while jumping on the housing shortage attracts others
Buying opportunity or value trap?
https://www.marketwatch.com/story/is-the-reit-bloodbath-finally-a-buying-opportunity-2018-03-28?siteid=bigcharts&dist=bigcharts
In December MarketWatch took a balanced view on investing in real estate investment trusts. REITs may be “cheap enough to warrant another look,” we wrote then.
The pro-REIT camp liked the macro fundamentals underpinning the investment — not to mention their cheap relative valuations — believing that those factors outweighed concerns about rising interest rates, investor disinterest and the Amazon AMZN, +1.33% effect that’s been clearing out the traditional shopping malls that anchor many of these funds.
Since then REITs have gotten even cheaper, and are now luring some analysts who’d shied away before.
The Vanguard Real Estate ETF VNQ, +1.05% is down about 9% for the year to date, worse than the 2% decline for the S&P 500 SPX, +1.16% . Shares of the PowerShares KBW Premium Yield ETF, meanwhile, have lost more than 12% so far in 2018.
REITs have been beaten down enough that Rick Daskin, an investor who in December told MarketWatch he was staying away, is now interested. Back then, Daskin, who serves as president of RSD Advisors, and subadvises Cumberland Advisors on MLP strategy, thought interest-rate risk was just too strong to make REITs, which depend on borrowing, attractive.
Now, he said, “relative to bonds and other things it looks to me like they present some opportunity. Retail REITs have gotten absolutely destroyed, and some are at a level where they’re near-distressed. And they may be superior to bonds because you’re scraping up more yield. The risk-reward might be coming more into focus.”
Within the retail sector, Daskin said, he’d concentrate on class “A” malls, those with higher foot traffic than lower-rated properties and with strong tenants.
“I don’t think you want to play at the bottom of the barrel,” he said.
A mall REIT that fits that description and is popular among analysts surveyed by FactSet is Simon Property Group, Inc. SPG, +1.33% , which has a mean overweight rating and a price target about 19% higher than current trading levels.
Another area he’d consider is health care, which is less sensitive to the economic cycle.
But as with so many considerations surrounding REITs, the specific details seem to trump the logic of the fundamentals.
Sabra Health Care REIT, Inc. SBRA, +2.23% , down about 7.5% for the year to date, has an overweight rating among FactSet analysts and a target price of $20.60, nearly 20% higher than current trading levels. Sabra has strong geographic diversification across the U.S., and properties in senior living, skilled nursing and specialty hospitals. It also boasts a dividend yield of 10.3%.
Still, in a recent note, Raymond James analysts wrote that Sabra’s “discounted valuation” was “attractive,” but that they were still “staying on the sidelines.”
“Skilled nursing facilities continue to face challenging fundamentals (decreasing lengths of stay, pressure on reimbursement rates, increasing regulatory pressures, difficult labor market),” they added. “While the ‘aging of America’ and massive demographic shift will eventually overcome these headwinds, we have yet to see an inflection in skilled nursing occupancies that would warrant a more favorable outlook for the stock.”
In contrast, Michael Underhill, chief investment officer at Pewaukee, Wis.-based Capital Innovations, LLC was bullish on REITs in December. While Underhill still believes most investors could benefit from some exposure to real estate in the form of REITs, he advocates being “surgical” about which to pick.
Underhill likes single-family rental REITS as a housing call. “We’ve got a housing shortage and you don’t have enough product and that’s holding back the buyers,” he said. “The single-family rental space in the mid-market to lower mid-market will be interesting because those types of buyers don’t have a significant amount of wealth put aside to purchase. The consumer will be renting rather than buying out of necessity.”
Read: We’re still building the wrong kind of homes for renters
Invitation Homes INVH, +0.31% is the leader in the single-family rental space, with about 82,000 homes of the roughly 200,000 held by institutional investors. The stock has a buy rating among FactSet analysts and a target price of $25.86, 14% higher than its Wednesday trading levels.
Outside of housing, Underhill isn’t buying the retail thesis. “We’re not buyers at these levels,” he told MarketWatch. “They could be a value trap. I don’t feel comfortable going into a sector that’s seeing a once-in-a-generation transition. Conversely, health care, that’s not a value trap, that’s growth on sale.”
Still, just as Daskin thought bonds were a better buy over REITs back in December, some analysts echo that idea now.
“In the near term, interest-rate rises may continue the trend of investors transitioning assets from premium income, higher risk products (like REITs) toward safer income-producing assets (bonds). Therefore, we are not adding to our REIT allocations at this time,” Jeremy Bryan, portfolio manager at Gradient Investments, told MarketWatch.
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>>> Equinix, Inc. (Data center REIT) is an American multinational company headquartered in Redwood City, California, that specializes in enabling global interconnection between organizations and their employees, customers, partners, data and clouds. The company is the leading global colocation data center provider by market share,[2] and it operates 175+ data centers in 44 major metropolitan areas in 22 countries on five continents.
Equinix was founded in 1998 to provide a neutral place where the networks forming the early internet could exchange data traffic. It expanded to Asia-Pacific in 2002[3] and Europe in 2007.[4] The company later began operating facilities in Latin America in 2011[5] and in the Middle East in 2012.[6] Its purchase of TelecityGroup in early 2016 established the company as the largest colocation provider in Europe.[7] In May 2017, Equinix completed the purchase of 29 Verizon data centers in a move to expand its presence across 15 markets in the U.S. and Latin America.[8]
The company offers colocation, interconnection solutions and related services to enterprises, content companies, systems integrators and 1,500+ network service providers worldwide. Equinix data centers host more than 2,750 cloud and IT service providers. Equinix offers several interconnection services, including Equinix Cross Connects, Equinix Performance Hub and Equinix Data Hub. The company operates the Equinix Cloud Exchange and an Internet Exchange. Its Professional Services group offers various consulting and technical support services.
Equinix says its broad geographic reach is a key differentiator that allows its customers to place equipment in proximity to their end users worldwide, which the company claims results in superior connectivity. Its global data center platform, which it calls Platform Equinix, is one of three components of a triple-ringed “moat”[9] the company says it must maintain to continue to outpace its competitors. It says the other two components are the interconnected industry ecosystems that populate its data center platform and its commitment to service excellence.[10]
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https://en.wikipedia.org/wiki/Equinix
>>> Here’s how to invest in real estate — think Warren Buffett-style, not shopping malls
By Sara Sjolin
June 27, 2017
http://www.marketwatch.com/story/heres-how-to-invest-in-real-estate-think-warren-buffett-style-not-shopping-malls-2017-06-27?siteid=bigcharts&dist=bigcharts
Hang out in data centers, not malls.
So, where to invest for the second half? Well, there’s lots of chatter about real estate investment trusts, aka REITs, after yesterday’s news that Warren Buffett has taken a big stake in Store Capital STOR, -0.26% .
REITs can yield big profits — but only if you know which ones to buy, say Bespoke Investment Group analysts for our call of the day.
“While the shopping mall REITs have been tanking, the REITs that lease out warehouses to tech companies that need space to house all of their servers and cloud data have been surging,” Bespoke’s team says.
“The ten best-performing REITs in 2017 are all in strong uptrends, with the exception of GEO and QCP. If you’re a trend investor, you’ll like these charts,” the analysts add. (They’re referring to Geo Group GEO, -2.96% and Quality Care Properties QCP, -0.72% .)
In other words, tech-exposed and health-care real-estate stocks have had a stellar start to the year and are likely to keep going up. Traditional retail real estate such as malls, however, face “Death by Amazon” as shoppers shift online. That means investors should avoid that type of building, according to Bespoke.
“While there has been lots of brainstorming about what to do with malls that often look like ghost towns these days, we haven’t seen any convincing ideas yet (except maybe turning them into tech data centers!),” the analysts say.
One of Bespoke’s picks also gets praise from Forbes and Seeking Alpha scribe Brad Thomas, who singles out CareTrust CTRE, -0.81% as a “REIT gem” set for relatively speedy earnings growth.
As for Buffett’s REIT pick, that’s along the lines of what Bespoke is backing — less than 20% of Store’s portfolio is in traditional retail.
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>>> CareTrust REIT, Inc. is a self-administered, self-managed real estate investment trust. The Company is engaged in the ownership, acquisition and leasing of healthcare-related properties. It makes investments in healthcare-related real estate assets. As of December 31, 2016, its real estate portfolio included 154 skilled nursing facilities (SNFs), SNF Campuses, assisted living facilities and independent living facilities. As of December 31, 2016, the 93 facilities leased to The Ensign Group, Inc. had a total of 9,916 beds and units and are located in Arizona, California, Colorado, Idaho, Iowa, Nebraska, Nevada, Texas, Utah and Washington; the 16 facilities leased to affiliates of Pristine Senior Living, LLC had a total of 1,488 beds and units; and the 42 remaining leased properties had a total of 3,515 beds and units and are located in California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Maryland, Michigan, Minnesota, North Carolina, Texas, Virginia, Washington and Wisconsin. <<<
>>> STORE Capital Corporation is an internally managed net-lease real estate investment trust. The Company is engaged in the acquisition, investment and management of single tenant operational real estate (STORE) properties. As of December 31, 2016, the Company owned a portfolio that consisted of investments in 1,660 property locations operated by 360 customers across 48 states. Its customers operate across a range of industries within the service, retail and manufacturing sectors of the United States economy, with restaurants, early childhood education centers, movie theaters, health clubs and furniture stores. The Company's portfolio includes investments in approximately 1,330 property locations operated by over 300 customers across approximately 50 states. The Company provides real estate financing solutions principally to businesses that own STORE properties and operate within the broad-based service, retail and industrial sectors of the United States economy. <<<
>>> Is all the talk of the death of the mall overdone?
By Ciara Linnane
June 8, 2017
http://www.marketwatch.com/story/is-all-the-talk-of-the-death-of-the-mall-overdone-2017-06-05?siteid=bigcharts&dist=bigcharts
Consumers still enjoy shopping as a leisure activity, and many online sales are connected with a store visit, says Fitch
Talk of the demise of the shopping mall may be overdone, according to Fitch Ratings, which on Monday took a neutral stance on retail REITS, or real estate investment trusts, the entities that own and manage malls and rent space to tenants.
Mall REITs are popular with investors for their attractive dividend yields. But the sector has come under pressure this year amid a wave of closure announcements from department store chains, sporting retailers and teen clothing retailers, among others. The retail sector is going through a period of severe retrenchment as it responds to the challenge from Amazon.com Inc. AMZN, -0.38% as well as changing consumer behavior and spending habits.
In case you missed it: From a risk-of-bankruptcy standpoint, the retail business is the new oil and gas
But Fitch is upbeat that bricks-and-mortar stores will continue to exist and attract shoppers, despite the inroads made by Amazon into just about every category. The ratings agency expects that about 70% of retail sales will still take place in a physical store in 2020, down from 80% today.
“Consumers by and large still enjoy shopping as a leisure activity, plus a significant portion of online sales are connected with a store visit,” Fitch Managing Director Steven Marks wrote in the first issue of the agency’s new Equity REIT Handbook.
Read: Weaker shopping malls leave mortgage-backed securities vulnerable
Some mall REITS, particularly class B, will struggle to grow rents as they lose tenants, he said. But Fitch is overall neutral on the sector, a position that is considerably less bearish than others.
Outside of retail, REITS in the office and industrial space have healthier fundamentals and can expect to perform better, said Marks. A softening of demand for space is not expected to pressure rents, while jobs growth should buoy tech employment-oriented markets.
Separately, Canaccord published a bullish note on prison REITs Monday, saying the pro-private, tough-on-crime policies of the current administration along with plans to reform immigration policy will benefit that sector. In February, Attorney General Jeff Sessions said he was reversing former President Barack Obama’s plan to phase out private prisons, arguing that it had hurt the government’s ability to meet the future needs of the federal prison system.
Obama had argued that private prisons are less safe than government-run ones.
“We believe the administration’s pursuit of additional ICE beds, in addition to capacity constraints and/or state reforms pushing for alternative corrections, create a material external growth opportunity,” said Canaccord analyst Michael Kodesch. “Furthermore, we see low risk to contract renewals in this environment across the board, with the continued exception that we are cautiously watching CoreCivic’s California out-of- state populations. “
Kodesch has a buy rating on prison REITS Core-Civic Inc. CXW, +0.50% and Geo Group Inc. GEO, +0.77% Core-Civic was trading down 1.1%, while GEO was down 0.4%.
Among mall REITs, AvalonBay Communities Inc. AVB, +0.33% was up 1.2% and Equity Residential EQR, +0.12% was up 0.6%, while Vornado Realty Trust VNO, -0.47% was up 0.1%.
Among the decliners, Taubman Centers Inc. TCO, -0.92% was down 1.2%, Public Storage PSA, -0.06% was down 1% and Prologis Inc. PLD, -0.17% fell 0.6%.
The AMG Managers CenterSquare Real Estate Fund MRESX, -0.54% , which has about $361 million in assets and a four-star ranking from Morningstar, was up 1% and has gained 0.6% in 2017, while the S&P SPX, +0.51% as gained about 9%.
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>>> What’ll Happen to US Commercial Real Estate as Chinese Money Dries Up? See Manhattan.
by Wolf Richter
Jul 17, 2017
http://wolfstreet.com/2017/07/17/what-happens-so-u-s-commercial-property-as-chinese-money-dries-up/
In the second quarter in Manhattan, Chinese entities accounted for half of the commercial real estate purchases with prices over $10 million. By comparison, in 2011 through 2014, total cross-border purchases from all over the world (not just from China) were in the mid-20% range.
“At a time when domestic investors have pulled back, foreign parties have ramped up their holdings in Manhattan,” according to Avison Young’s Second Quarter Manhattan Market Report.
This includes the $2.2 billion purchase in May of 245 Park Avenue by the Chinese conglomerate HNA Group, the sixth largest transaction ever in Manhattan. And at $1,282 per square foot, it was “among the highest price per pound for this type of asset.”
The purchase of the 45-story trophy tower is being funded in part by money borrowed in the US via a $508 million loan from JPMorgan Chase, Natixis, Deutsche Bank, Barclays, and Societe Generale, according to CommercialCafé. The rest is funded by HNA’s other sources, presumably in China.
The influx of Chinese money and the propensity by Chinese companies to hunt down trophy assets have propped up prices in Manhattan. And yet, despite the Chinese hunger, total sales volume has plunged, according to Avison Young:
At the end of the first half of 2017, the annualized forecast of total transaction volume was on pace to be 40% lower than 2016, and a 60% drop-off from 2015. At the current pace, 2017 is shaping up to have the lowest sales count since the period from 2008 to 2010, the last market trough.
Dollar volumes tell a similar story at the year’s halfway mark. The first quarter’s $3.2 billion in dollar transactions was improved to $5.6 billion in the second quarter, but this increase was largely attributable to a single $2.2 billion purchase while the first quarter lacked any billion dollar transactions.
From the third quarter of 2013 through the second quarter of 2016, the Manhattan market averaged 141 transactions per quarter and never recorded less than 112 in that 12-quarter span. In the trailing four quarters ending 2Q 2017, the average transaction count dropped to 71, with the most recent tally [in Q2] at 66 for this second quarter.
This chart by Avison Young shows the peak in 2015 and the plunge since (click to enlarge):
That’s the gloomy data on investment activity. Office leasing activity, the underpinning of the office market, isn’t exactly booming either. According to Avison Young’s report, office leasing volume in the second quarter plunged 32% year-over-year to 5.0 million square feet.
Both in Midtown and Downtown, leasing volume in Q2 plunged 35%. In Midtown, the vacancy rate rose to 11.0%, up from 10.1% a year ago; Downtown, it rose to 12.1%, up from 10.4% a year ago.
So the Chinese money is sorely needed to prop up the market. “Since the beginning of 2013, Chinese companies alone have poured nearly $18 billion into Manhattan real estate,” the report says, but cautions: “This flow of funds, however, may soon be threatened.”
Last year, the Chinese government got serious about imposing capital control. This year, it’s trying to crack down on lenders to get a grip on the ballooning risks threatening its financial system.Just over the weekend, top Chinese authorities struggled at the National Financial Work Conference with the rampant risk-taking and leverage. The Wall Street Journal:
Fear permeated markets, which tumbled Monday after President Xi Jinping gave a speech that supported efforts to tamp down complicated lending along with other financial-system risks. Frightened investors – seeing room for yet more policy tightening after cheery GDP growth data – are now searching for signs of the regulators’ next hit.
At hand is an ever-growing asset-management industry – now around 60 trillion yuan ($8.8 trillion) – and the deepening nexus of banks, brokers, trusts and insurance companies. The central bank elaborated on the linkages it uncovered in the asset-management industry in its recently published financial-stability report. That is likely telling of where regulators will go digging.
If regulators do take on the asset-management business, it could spell trouble for corporate borrowers. Corporate bonds account for more than 40% of underlying assets in wealth-management products sold by banks. Asset managers have been the only active buyers of these bonds so far this year.
On Monday, following the conference, the Shanghai Composite Index dropped 1.4%, and the small-cap index, ChiNext, which includes a lot of tech companies, plunged 5.1%, to the lowest level since January 2015.
China’s crackdown on leverage and fund-flows already had some consequences in the US and elsewhere: quashing a slew of Chinese cross-border deals, including Anbang Insurance Group’s $14 billion bid to acquire Starwood Hotels & Resorts.
These efforts by Chinese authorities to get financial risks and capital flows under control could have the effect, according Avison Young’s report, that “the major Chinese players may be regulated out of the market.” And with Manhattan being “a primary target for funds, it is likely to experience the greatest impact.”
This will happen just when domestic buyers have lost their appetite for overpriced commercial real estate after a breath-taking seven-year boom. The report identified “near-term impediments” to the commercial property market, among them:
•“Chinese governmental regulations on capital allocations outside the country.”
•“General investor sentiment.”
•“Rising interest rates.”
•Pre-recession 10-year commercial mortgages that have been packaged into Commercial Mortgage Backed Securities that are now struggling to refinance. Ratings agencies have also been warning about CMBS.
•“Slumping residential market, slow condo sales, and heavy concessions in rental market” as asking rents have been declining.
•“Dearth of construction financing and stalled construction sites needing funding.”
•“E-retail depressing brick-and-mortar retail values.” This meltdown has reached the Crown Jewel in American retailing as seen in haunting photos of Shuttered Stores on Madison Avenue
But unlike last time, there’s no Financial Crisis tripping up the property market. Stocks and bonds are booming. Wall Street is exuberant. There’s “no catastrophic event causing the current correction,” as the report explains. In other words, these are still the best of times.
And it’s not just in Manhattan. Chilling photos of for-lease signs are lining the Great America Parkway in Santa Clara, Silicon Valley. Read… Silicon Valley Begins to Crack Visibly
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>>> These dividend stocks are down a lot, but there’s plenty of cash flow to raise payouts
By Philip van Doorn
June 23, 2017
http://www.marketwatch.com/story/these-dividend-stocks-are-down-a-lot-but-theres-plenty-of-cash-flow-to-raise-payouts-2017-06-21?siteid=bigcharts&dist=bigcharts
Here are some possible bargains for income-seeking investors willing to consider contrarian plays
Shares of Kohl’s are down 27% this year, but the stock has a dividend yield above 6% and plenty of excess free cash flow to support a higher payout.
The S&P 500 index is up 9% so far in 2017, but there are losers in any market. And that’s where you might find long-term bargains, along with the expected batch of companies facing painful secular declines.
Two groups of companies that are particularly out of favor are brick-and-mortar retailers and real estate investment trusts that own malls or shopping centers. The reason for these groups’ pain is obvious: Amazon.com Inc. AMZN, +0.24% continues to dominate the rapidly growing online retail industry and grab business from traditional retailers.
But some of these plays still have attractive dividend yields and plenty of free cash flow to support higher payouts. A company’s free cash flow is its remaining cash flow after planned capital expenditures. We can calculate a “free cash flow yield” by looking at the last 12 months’ free cash flow per share and dividing it by the current share price. If the free cash flow yield exceeds the dividend yield, a company has “headroom” to raise dividends, or buy back stock, or make acquisitions or other expansions of their businesses, all of which can boost stock prices over the long term.
For REITs, we used funds from operations (FFO) instead of free cash flow, because FFO is generally considered the best way to measure a REIT’s ability to pay dividends. FFO adds depreciation and amortization back to earnings, while subtracting gains from the sale of assets.
Among the S&P 500 SPX, +0.16% 76 stocks were down at least 10% this year through June 20. Among these 76, a dozen have dividend yields above 3.5% and free cash flow headroom.
Here’s the list, sorted by dividend yield:
Company Ticker Industry Dividend yield Free cash flow yield - past 12 reported months ‘Headroom’ Price change - 2017 through June 20
Macy’s Inc. M, +0.81% Department Stores 6.83% 21.63% 14.80% -38%
Kimco Realty Corp. KIM, +0.78% Real Estate Investment Trusts 6.14% 7.44% 1.31% -30%
Kohl’s Corp. KSS, +2.01% Department Stores 6.11% 20.24% 14.13% -27%
Oneok Inc. OKE, +2.93% Oil and Gas Pipellines 5.18% 8.85% 3.67% -17%
Macerich Co. MAC, +0.51% Real Estate Investment Trusts 4.93% 7.12% 2.19% -19%
Target Corp. TGT, +0.26% Discount Stores 4.87% 16.78% 11.91% -30%
L Brands Inc. LB, +1.15% Apparel/ Footwear Retail 4.58% 6.95% 2.37% -20%
Simon Property Group Inc. SPG, -0.14% Real Estate Investment Trusts 4.28% 6.67% 2.39% -11%
Qualcomm Inc. QCOM, +0.78% Telecom. Equipment 4.01% 6.60% 2.59% -13%
People’s United Financial Corp. PBCT, +0.06% Savings Banks 3.95% 6.05% 2.10% -10%
Western Union Co. WU, +2.08% Data Processing Services 3.69% 9.32% 5.62% -13%
Regency Centers Corp. REG, +1.31% Real Estate Investment Trusts 3.55% 5.66% 2.11% -13%
Source: FactSet
All four REITs on the list own shopping centers and/or malls.
You can click on the tickers for additional information, including news, price-to-earnings ratios, estimates and ratings.
As with any “first screen” of stocks, the list is meant to spur further discussion as you consider whether any of these companies might be worth considering as an investment, especially if you crave dividend income.
It’s obvious that many of these companies are out of favor, as they face major challenges to their business models. But that doesn’t mean none will survive or even thrive over the long term.
If you see any names of interest here, your next step, as always, should be to do your own research, preferably with the assistance of your broker or investment adviser, to form your own opinions about the companies’ long-term prospects.
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>>> Kimco Realty -
https://www.fool.com/investing/2017/05/31/3-beaten-up-dividend-stocks-are-they-bargains.aspx?yptr=yahoo
5-31-17
Shopping center REIT Kimco Realty (NYSE:KIM), like the two other stocks mentioned here, hasn't performed too well in 2017. And it certainly makes sense, as many retailers that primarily operate in shopping centers -- such as Kmart, h.h. gregg, and Payless Shoe Source -- have all announced massive store closures in 2017.
However, the impact on Kimco has been minimal -- in fact, the loss due to these closures represents just 0.3% of Kimco's rental income.
Kimco's strategy is to operate in a little over 20 core markets, and to maintain a high level of tenant diversity. Kimco has 517 properties containing 84 million square feet of space, and 80% of the rent they generate is in these core markets. No more than 3.5% of the company's revenue comes from any single tenant, and the top tenants are made up of recession- and e-commerce-resistant businesses.
For example, discount retailers such as TJX, Ross Stores, Wal-Mart, and Dollar Tree, all of which are among Kimco's top 15 tenants, tend to do just fine during tough times, as customers seek bargains. Retailers such as Albertsons and PetSmart sell things people need, not just things people want. These are just a few examples of Kimco's roughly 4,000 individual tenants, but the point is that the company isn't too vulnerable to traditional, discretionary retail businesses closing stores.
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>>> Retail Meltdown Demolishes Mall Investors
by Wolf Richter
May 9, 2017
http://wolfstreet.com/2017/05/09/retail-meltdown-demolishes-mall-reit-investors/
Even the biggest.
The closure of thousands of retail chain stores last year and this year, with many more to come – from big anchor tenants such as Macy’s to smaller stores such as Payless Shoes – and the bankruptcies and debt restructurings ricocheting through the industry are having an impact on retail malls. And mall investors – that may include your retirement account – are getting crushed.
The commercial real estate industry has been claiming that these shuttered retail spaces are being converted into restaurants or fitness centers or smaller shops or whatever. And zombie malls are leasing out their parking lots to car dealers to store their excess new vehicle inventory, and that everything is going to be fine.
But investors in publicly traded Real Estate Investment Trusts that were for years among the stars in the S&P 500 are voting with their feet.
It’s not that these REITs are doing all that badly on an operational basis. They’re hanging in there. But many of the announced store closings and bankruptcies haven’t worked their way through the pipeline.
Shares of these REITs all peaked together at the very end of July 2016 and have since then plunged in unison.
Kimco Realty Corp (KIM) says it’s “one of North America’s largest publicly traded owners and operators of open-air shopping centers,” with “interests” in 517 shopping centers with 84 million square feet of retail space in 34 states and Puerto Rico. Shares fell 2.6% to $19.42 on Monday and 13% over the past month. They’re down 40% from the peak of $32.23 at the end of July 2016:
Macerich (MAC), with 54 million square feet of retail space at 48 regional shopping centers, calls itself “one of the country’s leading owners, operators and developers of major retail real estate.” It disclosed that revenues in Q1 fell 3.5% year-over-year, and that mall portfolio occupancy edged down to 94.3%, from 95.1% a year earlier.
It’s starting to feel the pain, but it’s not the end of the world. But its shares dropped 2.5% on Monday and 8.3% over the past month. They’re down 36% from the peak at the end of July, 2016:
Simon Property Group (SPG), “the world largest publicly traded real estate company,” as it says, fell 1% to $162.84 on Monday and 7% over the past month. It’s down 29% since the peak at the end of July. And this despite a massive share buyback program, that included buying back 870,692 shares in Q1:
GGP, formerly General Growth Properties, is also trying to use share buybacks to prop up its share price. In Q1, it bought back 2.57 million shares for $59.6 million. Nevertheless, shares fell 12% over the past month to $22.19 as of Monday and are down 30% from the peak at the end of July:
Federal Realty Investment Trust (FRT) has 98 malls with a total of 23 million square feet of retail space in “major coastal markets.” It also has over 1,800 apartments. So you gotta get creative during tough times. In its Q1 earnings report, it said:
March 28, 2017 – Federal Realty announced its exclusive partnership with Freight Farms, a Boston-based company that retrofits shipping containers with vertical farming technology capable of growing acres’ worth of produce in a fraction of the space of traditional farms. The partnership empowers anyone to use this technology while repurposing Federal Realty’s unused parking spaces as a place to locally and sustainably produce food that benefits the shopping centers’ tenants, customers, and community.
Its shares fell 1.8% on Monday and 3% over the past month. They’re down 24% from the peak at the end of July 2016:
Regency Centers Corp (REG), with 429 shopping centers totaling 57.2 million square feet of retail space, focuses on “grocery-anchored retail centers located in the most attractive U.S. markets.” Its shares fell 1.9% to $61.49 on Monday and 8% over the past month. They’re down 28% from the peak at the end of July:
This is how the brick-and-mortar pain is translating into pain for mall-REIT investors. But why have share prices gotten crushed when, operationally, the REITs are still hanging in there and are paying fat dividends? That can best be answered by a look at the meteoric rise of those shares over the years leading up to July 2016.
Some of the share prices more than doubled over those years, as part of the commercial property bubble that got so huge that the Fed keeps publicly fretting about it, naming it as one of the reasons for raising interest rates, precisely to tamp down on the valuations. The Fed is worried that an implosion of these inflated commercial property values can take down the banks.
Mall REITs were part of this inflated commercial property universe, and they soared with it. That entire universe is now peaking. But separately, mall REITs are also caught up in the relentless brick-and-mortar retail meltdown, as online shopping is taking over. This is a structural shift that will continue to progress. Mall owners are already trying to find a way to “repurpose” their malls. But this isn’t going to be smooth.
As so many times, Private Equity firms are in the thick of it. Read… I’m in Awe of How Fast Brick-and-Mortar Retail is Melting Down
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Beacon Roofing Supply - >>> Small-cap fund manager tunes out market ‘noise’ in bid to find quality companies
By Philip van Doorn
Feb 18, 2017
http://www.marketwatch.com/story/small-cap-fund-manager-tunes-out-market-noise-in-bid-to-find-quality-companies-2017-02-16?siteid=yhoof2
Bassett, who helps manage the $1.7 billion Aberdeen U.S. Small Cap Equity Fund from Philadelphia, shared three of his favorite stocks held by the fund in an interview Feb. 14:
Beacon Roofing Supply
Beacon Roofing Supply Inc. BECN, of Herndon, Va., has a market value of $2.7 billion. The company grew its sales per share by 36% during 2016, according to FactSet.
“We have always liked how they were able to consolidate a fragmented industry,” Bassett said. In October 2015, the company completed the acquisition of Roofing Supply Group, which Bassett said was its largest private competitor.
“That has given them the ability to leverage back-office costs, distribution, technology, etc., allowing them to [improve] economies of scale,” he said, adding that a reduction in debt has set up further margin improvement. This makes the company “slightly less dependent on macro factors” over the next two years, Bassett said.
Beacon’s shares closed at $45.32 on Feb. 14 and traded for 16.9 times the consensus 2018 earnings estimate of $2.69 a share, among analysts polled by FactSet.
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>>> Beacon Roofing Supply, Inc., together with its subsidiaries, distributes residential and non-residential roofing materials, and other complementary building materials to contractors, home builders, retailers, and building materials suppliers. The company?s residential roofing products include asphalt shingles, synthetic slates and tiles, clay and concrete tiles, slates, nail base insulations, metal roofing, felts, synthetic underlayment, wood shingles and shakes, nails and fasteners, metal edgings and flashings, prefabricated flashings, ridges and soffit vents, and other accessories. Its non-residential roofing products comprise single-ply roofing, asphalt, metal, modified bitumen, and build-up roofing products; cements and coatings; flat stock and tapered insulations; commercial fasteners; metal edges and flashings; smoke/roof hatches; roofing tools; sheet metal products, including copper, aluminum, and steel; and PVC, thermoplastic olefin, and ethylene propylene diene monomer membrane products. The company also provides complementary building products, such as vinyl, wood, and fiber cement sidings; and stone veneers, windows, doors, skylights, and gutters and downspouts, as well as decking and railing, water proofing, building insulation, and millwork products. In addition, it offers value-added services primarily, including advice and assistance on product identification, specification, and technical support; job site delivery, rooftop loading, and logistical services; tapered insulation design and related layout services; metal fabrication and related metal roofing design and layout services; trade credit; and marketing support for contractors. As of September 30, 2016, the company operated through a network of 368 branches in 46 states of the United States and 6 provinces in Canada. Beacon Roofing Supply, Inc. was founded in 1928 and is headquartered in Herndon, Virginia. <<<
>>> Apogee Enterprises, Inc. designs and develops glass solutions for enclosing commercial buildings and framing art in the United States, Canada, and Brazil. The company operates through four segments: Architectural Glass, Architectural Services, Architectural Framing Systems, and Large-Scale Optical Technologies (LSO). The Architectural Glass segment fabricates coated and high-performance glass used in customized windows and wall systems comprising the outside skin of commercial, institutional, and multi-family residential buildings. The Architectural Services segment designs, engineers, fabricates, and installs the walls of glass, windows, and other curtain wall products making up the outside skin of commercial and institutional buildings. The Architectural Framing Systems segment designs, engineers, fabricates, and finishes the aluminum frames used in customized aluminum and glass windows, curtain walls, storefronts, and entrance systems comprising the outside skin, as well as entrances of commercial, institutional, and multi-family residential buildings. The LSO segment manufactures value-added glass and acrylic products for the custom picture framing and fine art markets. The company?s products and services are primarily used in commercial buildings, such as office towers, hotels, and retail centers; and institutional buildings, including education facilities and dormitories, health care facilities, and government buildings, as well as multi-family buildings. It markets its architectural products and services through direct sales force, independent sales representatives, and distributors to general contractors and glazing subcontractors, architects, and building owners; and value-added glass and acrylics through retail chains, picture framing shops, and independent distributors to museums, and public and private galleries. Apogee Enterprises, Inc. was founded in 1949 and is headquartered in Minneapolis, Minnesota <<<
>>> Evictions by Wall-Street Mega-Landlords Soar, Financialization of Rents Cause “Housing Instability”: Atlanta Fed
by Wolf Richter
Jan 7, 2017
http://wolfstreet.com/2017/01/07/evictions-by-wall-street-mega-landlords-soar-financialization-of-rents-cause-housing-instability-atlanta-fed/
It blames the Fed & Bernanke; the dark side of “healing” the housing market.
The housing collapse during the Financial Crisis keeps on giving. On Friday, Invitation Homes, a creature of private-equity firm Blackstone, and largest landlord of single-family rental homes in the US, filed with the SEC to raise up to $1.5 billion in an IPO. Deutsche Bank, JP Morgan, BofA Merrill Lynch, Goldman Sachs, Wells Fargo, Credit Suisse, Morgan Stanley, and RBC Capital Markets are the joint bookrunners and get to cash in on the fees.
Invitation Homes, founded in 2012, now owns 48,431 single-family homes, according to the filing. It bought them out of foreclosure and turned them into rental properties, concentrated in 12 urban areas. Revenues for the nine months through September 30 rose 11.4% to $655 million, producing a net loss of $52 million. It lists $9.7 billion in single-family properties and $7.7 billion in debt.
Blackstone was a pioneer in the post-Financial Crisis buy-to-rent scheme, including issuing the first rent-backed structured securities in November 2013. The collateral for the $479-million deal was rental income from 3,207 homes. Blackstone paid rating agencies Moody’s, Kroll, and Morningstar to rate the bonds; so nearly 60% of the debt was rated AAA. Other tranches carried lower ratings. The overall cost of capital to Blackstone from the securitization of these rents was about 2.01%. Cheap money! Thank you hallelujah QE and ZIRP.
Rent-backed securities have since become a common funding mechanism.
Other players in the buy-to-rent scheme have already gone public. American Homes 4 Rent, which owns about 48,000 rental houses in 22 states, went public in August 2013. It has produced a net loss every year since, sports negative EPS of -25 cents and a negative PE ratio of -84.
Starwood Waypoint Residential Trust was spun off from Starwood Property Trust Inc. and started trading in February 2014. In 2016, it merged with Thomas Barrack’s Colony Capital and changed its name to Colony Starwood Homes. Colony is now the third-largest single-family landlord. It too has lost money every year since going public, has negative EPS of -47 cents and a negative PE ratio of -62. Colony founder Barrack is now chairman of Trump’s inauguration committee.
But there’s a drawback: 32% of Colony’s properties in Atlanta and adjacent suburbs have eviction filings, by far the highest rate among the Wall Street landlords, according to a study by the Atlanta Fed on the impact of Wall Street landlords on surging “housing instability.”
The report doesn’t name names, but Ben Miller, co-author of the report, filled in the blanks for Bloomberg. Next in line in eviction rates: American Homes 4 Rent, HavenBrook, owned by Pimco, and Invitations Homes. The percentage of properties with eviction filings in Atlanta by the largest Wall-Street landlords:
The report indicated that eviction rates in some other cities are lower. But this being the Atlanta Fed, it focused on Atlanta, one of the hotbeds of the buy-to-rent scheme. And it focused on single-family rentals because Wall Street’s muscling into this space is new and perhaps a generational shift in the US housing market.
So how did this Wall Street landlord nirvana – and the ensuing “housing instability” – come about after the housing bust? The report blames the Fed, and Fed Chairman Ben Bernanke:
In unwinding their bank-owned properties, the GSEs [Fannie Mae, Freddy Mac, etc.], U.S. Treasury, and Federal Reserve innovated new structured transactions for disposing of hundreds of thousands of bank-owned homes, also known as real estate owned (REO). The Federal Reserve was the first to suggest that private equity firms were the one group with cash on hand to invest in foreclosed homes (Bernanke, 2012).
In 2012, the Federal Housing Finance Agency (FHFA), conservator of the GSEs, issued a pilot to develop structured transactions that could be used to sell its REO homes in bulk. The private market followed by developing and standardizing financial instruments to allow broader market investment in converting foreclosed homes into single-family rentals. Rental housing, traditionally the purview of mom-and-pop landlords, caught the attention of large financial firms.
Nationwide, an estimated 350,000 homes were purchased by institutional investors from 2011 to 2013, and these were spatially concentrated in cities like Atlanta with high numbers of bank-owned homes and the prospect of future home price appreciation. Today there is high concentration in the single-family rental business, with an estimated 170,000 single-family rental homes owned by the seven largest firms.
“My hope was that these private equity firms would provide a new kind of rental housing for people who couldn’t – or didn’t want to – buy during the housing recovery,” Elora Raymond, the report’s lead author, told Bloomberg. “Instead, it seems like they’re contributing to housing instability in Atlanta, and possibly other places.”
Evictions are cheap in Atlanta: about $85 in court fees and another $20 to have the tenant ejected, report co-author Michael Lucas told Bloomberg, which added: “With few of the tenant protections of places like New York, a family can find itself homeless in less than a month.”
The report points at the broader implications beyond poor neighborhoods: While “evictions are highly correlated with neighborhood characteristics such as education levels, change in the employment-population rate, and racial composition,” Wall Street landlords still filed for evictions at higher rates than smaller landlords after accounting for “property and neighborhood characteristics.” Why? The report:
One possible reason large corporate landlords backed by institutional investors may have higher eviction filing notices is that they may routinely use eviction notices as a rent collection strategy.
Bloomberg adds:
In interviews and court filings, renters and housing advocates said that some investment firms are impersonal and unresponsive, slow to make necessary repairs and quick to evict tenants who withhold rent because of complaints about maintenance.
“They want to get them out quickly if they can’t pay,” explained Aaron Kuney, a former executive of HavenBrook and now CEO of PE landlord Piedmont Asset Management in Atlanta. “Finding people these days to rent your homes is not a problem.”
Then there’s the expense of housing, which has soared, thanks to the Fed’s efforts to “heal” the housing market. According to the report, 53.4% of renters were “cost burdened in Atlanta” in 2014. More generally, homeownership has declined to a 51-year low, and “demand for rentals has caused urban rents to increase sharply”:
During the 2010 to 2014 period, low-cost rentals in Atlanta declined by more than 15%. Gentrification, or the influx of wealthier residents accompanied by rising property prices and the displacement of existing, lower-income residents, can be a factor in evictions.
The effect of evictions is “housing instability or insecurity”:
Families with insecure or unstable housing may move frequently, suffer eviction, or otherwise be at increased risk of homelessness.
Evictions can result in personal loss of property, trigger job loss, and lead to underperforming schools and poor student outcomes. Even an eviction filing that is resolved can mar a tenant’s credit record and bar that person from renting elsewhere or accessing public assistance.
At the neighborhood level, high eviction rates are associated with poor housing conditions, high rates of school turnover, and neighborhood and community instability.
But it’s not just Atlanta, according to the Atlanta Fed: “There is increasing documentation of an ensuing high rate of evictions in U.S. cities, partly due to tenants’ inability to afford higher rents.”
So is the Fed having second thoughts about its efforts to encourage Wall Street to muscle into the single-family home market in big urban areas, drive up housing costs around the country, and turn rents in to a finanzialized product? I doubt it. Bernanke, the engineer of all this, has moved on; and the Fed, credited with “healing” the housing market, never has second thoughts about its actions.
But the Fed is worried about “real wage” increases. It’s about cheap labor. Read… The Thing in the Jobs Report that Gives the Fed the Willies
57 comments -
Jim Smith
Jan 7, 2017 at 12:54 pm
How do these firms stay in business with negative earnings, is it because they are booking profits on the price increase of their assets-homes.
And as rates go back up, which they will do if their is wage inflation will all these firms have to sell?
Reply
Wolf Richter
Jan 7, 2017 at 1:04
They stay in business because they have access to cheap capital that they can burn with their money-losing operations. Investors support them on the hope that they’re sitting on big capital gains from their home purchases in 2011-2014.
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>>> Top funds for real estate stocks
http://m.kiplinger.com/article/investing/T044-C008-S003-5-reits-to-buy-now-for-income-and-growth.html
If you prefer to buy real estate investment trusts through a fund, you have plenty of choices. One good one is Manning & Napier Real Estate S (symbol MNREX), which holds 56 real estate stocks—mainly REITs such as mall owner Simon Property Group and storage firm Prologis. Over the past five years through June 10, the fund returned 12.4% annualized, beating 93% of its peers. One drawback: annual fees, at 1.09%, are above average.
Fidelity Real Estate Investment (FRESX) returned 12.5% annualized over the past five years. Veteran manager Steve Buller looks for REITs that offer growth at a reasonable price and says he’s emphasizing health care and triple-net-lease REITs these days. The fund yields 2.5% and costs 0.78% in annual expenses.
If you simply want to track the REIT market, buy Schwab U.S. REIT ETF (SCHH), an exchange-traded fund that follows the Dow Jones U.S. Select REIT index, a basket of 96 stocks weighted by market value. Yielding 3.1%, the ETF pays out more than most mutual funds, thanks to a rock-bottom expense ratio of 0.07%.
For ultra-high income, consider iShares Mortgage Real Estate Capped ETF (REM). The fund, which yields 11.0%, invests in mortgage REITs—firms that own real-estate-backed loans. Mortgage REITs could tumble if short-term interest rates climb sharply while long-term rates stay flat or decline (squeezing the REIT’s profit margins). But that looks unlikely over the next year. Annual expenses are 0.48%.
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>>> Sovran Self Storage
http://m.kiplinger.com/article/investing/T044-C008-S003-5-reits-to-buy-now-for-income-and-growth.html
Sales are going strong for Sovran (SSS, $101.91, P/E 18, 3.1%), a self-storage REIT that owns more than 550 properties in 26 states under the Uncle Bob’s brand. The firm is landing customers with its modernized, climate-controlled facilities, many of which are located in high-traffic urban and suburban areas. Occupancy hit 90.5% in the first quarter, up one percentage point from a year earlier. Sovran is also expanding with a $1.3 billion deal, announced in April, to acquire 84 properties from LifeStorage, a privately held firm whose buildings generate higher average rents per square foot than Sovran’s real estate.
Sovran issued 6.9 million shares of stock to finance the LifeStorage deal. That could dilute FFO per share in the near term and lower the REIT’s net asset value per share (the estimated market value of Sovran’s properties, less outstanding debt). Still, analysts see Sovran’s revenue jumping a healthy 17% this year, to $430 million. Sovran recently hiked its annual dividend rate by 11.8%, to $3.80 per share, and it ramped up its 2016 FFO forecast to as much as $5.55 per share, up 14.4% from 2015. Although the stock looks pricey at 18 times FFO, it has room to climb. Bank of America Merrill Lynch, which rates the stock a buy, expects the shares to hit $120 a year from now.
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>>> Realty Income
http://m.kiplinger.com/article/investing/T044-C008-S003-5-reits-to-buy-now-for-income-and-growth.html
Most REITs pay quarterly dividends, but Realty (O, $64.30, P/E 22, 3.5%) shells out cash monthly, paying about 20 cents per share like clockwork. That income arises from Realty’s vast collection of properties: 4,615 buildings, leased mainly to big retailers such as Walgreens and Dollar General. These firms sign long-term triple-net, or NNN, leases with Realty, requiring them to pay for all property taxes, maintenance and insurance.
Although Realty isn’t a high-growth REIT, it’s a solid earner. The firm has paid dividends for a stunning 550 consecutive months. Its 98% property occupancy rate has never slipped below 96%, and revenues are climbing thanks to rent increases built into leases and a steady stream of property acquisitions. Realty expects FFO to rise by as much as 4.3% this year. That should support more growth in the dividend, which Realty has increased at an annualized rate of 4.7% since going public in 1994.
At 22 times FFO, Realty is one of the pricier REITs, and its stock may stay flat in the near term. But stick with it: You can scoop up steady monthly dividends while waiting for the shares to edge higher over the long run.
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>>> Omega Healthcare Investors Inc
http://m.kiplinger.com/article/investing/T044-C000-S015-looking-for-a-high-yield-try-these-3-reits.html?rid=SYN-yahoo&rpageid=15273
High Yield: 6.95%
Investors looking for higher-than-average dividend yields may want to consider REITs that specialize in a niche area. Omega Healthcare Investors Inc (OHI) is one such specialized REIT.
As its name implies, OHI focuses its attention on healthcare-related real estate. Demand for healthcare continues to rise, and as that demand has expanded so has the number of facilities needed to conduct that medical business. That’s were OHI comes in.
Omega provides capital to property owners in order to build their facilities. However, many of OHI’s loans have been in the sale-lease-back style, meaning after a period of time, OHI will buy the building back and the tenant will continue to lease the property from Omega.
The added bonus is that OHI has specialized even further by only focusing on skilled nursing facilities and assisted living facilities. Today, the REIT owns 932 skilled nursing facilities in the United States and the United Kingdom. The vast bulk of its rents come from the U.S. government by way of Medicare and Medicaid. While the government won’t pay much, it always pays on time.
That steady nature has allowed OHI to continue with its dividend growth, fund future expansions and provided investors with a high yield of nearly 7%.
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Realty Income, Sovran -- >>> 5 High-Yielding REITs for Dividend Investors
Kiplinger
By Daren Fonda
http://finance.yahoo.com/news/5-high-yielding-reits-dividend-142001629.html
If you're a small-time landlord, real estate can be a ton of work, with an uncertain payoff. But stick with real estate investment trusts and you're likely to be rewarded. Over the past 15 years, property-owning REITs have generated an average annual total return of 11.2% a year, doubling the 5.5% annualized gain of Standard & Poor's 500-stock index.
As giant landlords, REITs (rhymes with treats) own everything from apartment buildings to offices, malls, warehouses and hotels. Regardless of what they hold, they're required to shell out at least 90% of taxable income to shareholders. That makes them gravy trains for dividends. REIT stocks today yield 3.8%, on average, well above the 2.2% yield of the S&P 500.
REITs could get a lift, too, from a new buying wave by mutual funds. Until now, S&P has classified REITs as financial stocks, along with banks, brokers and other such firms. That was always an odd fit for real estate developers and landlords. But starting in September, two big index providers--MSCI and S&P Dow Jones Indices--plan to carve out REITs and real estate operating companies into a stand-alone sector. Real estate will be the eighth-largest group in the S&P 500--bigger than materials, telecommunications and utilities. Many mutual funds ignore REITs, and the change could prompt more interest in the stocks, propping up the sector.
Of course, REITs could take some lumps, too. After returning 10.6% in the past year, the stocks have edged into pricey territory, trading, on average, at 103% of their net asset values, slightly above their historical average. REIT stocks could face pressure, moreover, if long-term interest rates climb. That would make REIT yields less attractive than bonds and other fixed-income investments.
Yet Kiplinger's doesn't expect big rate hikes over the coming year, partly because inflation expectations remain muted. REITs continue to offer yields that are greater than those of investment-grade bonds. And their payouts are likely to climb more than those of utilities or other income investments, making them a better bet long term.
Below are five REITs we like for their dividend yields, growth prospects and reasonable share prices. Note that price-earnings ratios are based on estimated year-ahead funds from operations, a common REIT measure that represents net income plus depreciation expenses. (Returns, prices and related data are through June 10).
Gaming and Leisure Properties
Visit a casino and you'll probably lose money at the slot machines or table games. A better bet: Gaming and Leisure Properties (symbol GLPI, $34.07, P/E ratio 11, yield 6.4%). The REIT recently bought 14 casinos from Pinnacle Entertainment in a deal worth about $5 billion. Gaming issued $1.1 billion worth of stock to help finance the acquisition, and it now carries a hefty $4.9 billion in long-term debt on its balance sheet.
Overall, though, the purchase is a good deal for shareholders. With revenue now flowing from 35 casino and hotel properties in 14 states, Gaming and Leisure should generate ample cash to fund its dividend and raise it as rental income climbs gradually. Jeffrey Kolitch, manager of Baron Real Estate Fund (BREFX), figures that within a year the firm will bump its annual payout from $2.24 per share to $2.45. At 11 times estimated FFO, the stock trades well below the average of 18 for all property-owning REITs. The shares look "mispriced," says Kolitch, who sees the stock hitting $41 over the next year.
Host Hotels & Resorts
Lodging REITs such as Host Hotels (HST, $15.40, P/E 9, yield 5.2%) have hit the bargain bin. Investors worry that hotel revenues, after climbing for years, appear to be peaking, and they fear that competition from Airbnb and other home-rental websites will cut into occupancy rates and hotel profits. All this has taken a toll on Host's stock, which has sunk 17% over the past year. Yet at just 9 times projected FFO, the shares look compelling.
The largest U.S. lodging REIT, Host owns 92 upscale hotels and resorts, including luxury properties such as the Hyatt Regency Maui Resort and Spa, and the W Hotel in New York City's Union Square. Demand for its hotels, which other companies manage, appears to be healthy, with average revenue per available room (a common lodging REIT measure) climbing 3.6% in the first quarter compared with the same period in 2015. For Host's core clientele--upscale business and leisure travelers--competition from the likes of Airbnb isn't likely to pose a major threat.
Granted, Host's revenues would slump if the economy weakens and business travelers spend less on lodging. Yet that would likely be a temporary setback. Host's balance sheet looks strong, with a manageable debt level relative to its income. Its dividend should be secure, too, says Mike Underhill, manager of RidgeWorth Capital Innovations Global Resources and Infrastructure =Fund (INNNX). Over the next year, he expects the stock to hit $19.
Realty Income
Most REITs pay quarterly dividends, but Realty (O, $64.30, P/E 22, 3.5%) shells out cash monthly, paying about 20 cents per share like clockwork. That income arises from Realty's vast collection of properties: 4,615 buildings, leased mainly to big retailers such as Walgreens and Dollar General. These firms sign long-term triple-net, or NNN, leases with Realty, requiring them to pay for all property taxes, maintenance and insurance.
Although Realty isn't a high-growth REIT, it's a solid earner. The firm has paid dividends for a stunning 550 consecutive months. Its 98% property occupancy rate has never slipped below 96%, and revenues are climbing thanks to rent increases built into leases and a steady stream of property acquisitions. Realty expects FFO to rise by as much as 4.3% this year. That should support more growth in the dividend, which Realty has increased at an annualized rate of 4.7% since going public in 1994.
At 22 times FFO, Realty is one of the pricier REITs, and its stock may stay flat in the near term. But stick with it: You can scoop up steady monthly dividends while waiting for the shares to edge higher over the long run.
Sovran Self Storage
Sales are going strong for Sovran (SSS, $101.91, P/E 18, 3.1%), a self-storage REIT that owns more than 550 properties in 26 states under the Uncle Bob's brand. The firm is landing customers with its modernized, climate-controlled facilities, many of which are located in high-traffic urban and suburban areas. Occupancy hit 90.5% in the first quarter, up one percentage point from a year earlier. Sovran is also expanding with a $1.3 billion deal, announced in April, to acquire 84 properties from LifeStorage, a privately held firm whose buildings generate higher average rents per square foot than Sovran's real estate.
Sovran issued 6.9 million shares of stock to finance the LifeStorage deal. That could dilute FFO per share in the near term and lower the REIT's net asset value per share (the estimated market value of Sovran's properties, less outstanding debt). Still, analysts see Sovran's revenue jumping a healthy 17% this year, to $430 million. Sovran recently hiked its annual dividend rate by 11.8%, to $3.80 per share, and it ramped up its 2016 FFO forecast to as much as $5.55 per share, up 14.4% from 2015. Although the stock looks pricey at 18 times FFO, it has room to climb. Bank of America Merrill Lynch, which rates the stock a buy, expects the shares to hit $120 a year from now.
STAG Industrial
Leasing warehouses to auto-parts makers and other industrial firms, STAG (STAG, $22.72, P/E 14, 6%) has been snapping up properties since going public in 2011, amassing 223 buildings with more than 40 million square feet of space. Demand for warehouses should stay healthy as long as the economy keeps expanding. And STAG aims to keep up its growth, planning to acquire or develop $1.7 billion worth of properties over the next few years.
Spending heavily to buy warehouses has pushed STAG's debt load to 36% of its property values, according to brokerage firm Baird. That's slightly above average for industrial REITs. But it isn't excessive relative to STAG's income, and it shouldn't prevent the firm from acquiring more real estate. Meanwhile, rental income is rolling in. First-quarter FFO rose by 11.4% from the same period a year earlier, and STAG generates plenty of cash to support its dividend, which, Baird says, it should be able to hike at an annual clip of 7% to 8%. Trading about 20% below STAG's net asset value of $28.30 a share, the stock looks like a good value, says Baird, which expects it to hit $24 over the next year.
Top funds for real estate stocks
If you prefer to buy real estate investment trusts through a fund, you have plenty of choices. One good one is Manning & Napier Real Estate S (symbol MNREX), which holds 56 real estate stocks--mainly REITs such as mall owner Simon Property Group and storage firm Prologis. Over the past five years through June 10, the fund returned 12.4% annualized, beating 93% of its peers. One drawback: annual fees, at 1.09%, are above average.
Fidelity Real Estate Investment (FRESX) returned 12.5% annualized over the past five years. Veteran manager Steve Buller looks for REITs that offer growth at a reasonable price and says he's emphasizing health care and triple-net-lease REITs these days. The fund yields 2.5% and costs 0.78% in annual expenses.
If you simply want to track the REIT market, buy Schwab U.S. REIT ETF (SCHH), an exchange-traded fund that follows the Dow Jones U.S. Select REIT index, a basket of 96 stocks weighted by market value. Yielding 3.1%, the ETF pays out more than most mutual funds, thanks to a rock-bottom expense ratio of 0.07%.
For ultra-high income, consider iShares Mortgage Real Estate Capped ETF (REM). The fund, which yields 11.0%, invests in mortgage REITs--firms that own real-estate-backed loans. Mortgage REITs could tumble if short-term interest rates climb sharply while long-term rates stay flat or decline (squeezing the REIT's profit margins). But that looks unlikely over the next year. Annual expenses are 0.48%.
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>>> Get real: Billions set to pour into real-estate investments
The Standard & Poor's 500 and other big stock indexes will soon carve out real estate investments from the financial sector and give them their own category
Associated Press
By Stan Choe
http://finance.yahoo.com/news/real-billions-set-pour-real-161651503.html
NEW YORK (AP) -- Mutual funds are about to get much more real.
A big change is coming in how stock indexes measure the market, one that's likely to push tens of billions of dollars into real-estate investments, according to estimates. All that cash could drive further gains for a group of stocks that's already done quite well since the financial crisis. Critics say it could also make an area of the market that they call overvalued even more so.
The deluge of cash is the result of a re-think by index providers about how they see the market's construction. The Standard & Poor's 500 and other indexes have long split the market into 10 main sectors, such as technology companies or utilities or industrials. After the market closes on Aug. 31, S&P Dow Jones Indices and MSCI will carve out real estate to become the 11th sector.
For investors who own only broad index funds, the change won't mean much. Real-estate investment trusts, which own apartments, office buildings and shopping malls, will still make up about 3 percent of the S&P 500, and they'll make up the same percentage of S&P 500 index funds.
The change is much more than housekeeping for actively managed mutual funds, which still control more dollars than their index-fund rivals.
It's a stock picker's job to be different from the index. That's why they charge more in expenses than S&P 500 funds, for the opportunity to do better than the index. Even so, active managers pay close attention to how indexes are constructed. If their portfolios are very different, they'll need to explain why to their investors.
Many mutual funds have nothing at all invested in real estate. Nearly 40 percent of large-cap core fund managers have zilch, according to a review by Goldman Sachs strategists. But that's not obvious from a quick glance at funds' marketing materials, which generally show how much is invested in each of the 10 big sectors.
REITs are currently categorized as part of the financial sector. So an actively managed fund could have 16 percent of its investments in financial stocks, the same as the S&P 500, but with no real estate. At first glance, such a fund could look like it's built similarly to the S&P 500 index. But come September, that same fund would suddenly appear as if it's optimistic about banks, insurers and other financial companies — and pessimistic about real estate — because it will hold more financials and less REITs than the index.
THE WAVE HAS ALREADY BEGUN
Estimates vary widely on how much REIT buying the index changes will drive, but most are big. They range from about $10 billion to 10 times that.
"It's a tsunami," says Mike Underhill, portfolio manager at the RidgeWorth Capital Innovations Global Resources and Infrastructure fund, which owns several REITs. And he says the buying has already started.
He's recently noticed prices doing better than he'd typically expect for REITs that operate in areas where renters are falling behind on rents. He attributes that to mutual funds buying REITs in advance of the index shift.
ALREADY STRONG PERFORMANCE
The expected jump in demand could help keep REIT prices high, even after their strong performance both this year and since the stock market bottomed in March 2009. An index of REITs by MSCI has returned a cumulative 434 percent since March 9, 2009, versus 265 percent for the S&P 500.
Investors have been buying REITs in part because they offer relatively big dividends. Bond yields are low, so investors have gone searching elsewhere for yield. And REITs can avoid taxes if they pass on 90 percent of their profit to shareholders as dividends.
That's drawn investors to REITs like Simon Property Group, which owns shopping malls around the country, or Public Storage, which runs self-storage units.
The jump for REITs mean they make up about 3 percent of the S&P 500 index now, up from 0.1 percent in 2003, according to Goldman Sachs. When it becomes the 11th sector, real estate will be roughly the same size as the utilities, raw materials and telecom services sectors. The largest component in the S&P 500 is technology, which makes up 21 percent of the index.
WORRIES AND CONSEQUENCES
All the demand for REITs in recent years, though, means their prices have climbed not only on an absolute level but also relative to how much cash their businesses are producing. The jumps have been big enough that some investors call REITs overly expensive, while others say they're fairly valued. Most fund managers agree that REITs are no longer cheap.
The index changes could have particularly big impacts on investors with funds that focus on just financial stocks, which control a total of about $39 billion in assets.
The largest such exchange-traded fund, the Financial Select Sector SPDR fund, has already laid out its plans. It will pay out a special dividend to investors in September, one made up entirely of shares of an ETF created in October that focuses exclusively on REITs.
But the index shifts will likely reverberate across the market. S&P Dow Jones Indices and MSCI say they're upgrading real estate to stand-alone "sector" status because they want to acknowledge its importance to the global economy. That may push lay investors to give the sector a closer look.
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>>> Trump: His early rise into fame and wealth, his near fatal end and his resilient comeback
Iliana E. Perez
December 2000
http://www.nyu.edu/classes/keefer/ww1/perez.html
Trump: His early rise into fame and wealth, his near fatal end and his resilient comeback
The weird thing about Donald Trump is, as much as he tried to be a figure of ridiculous fun and shrug of gossip, lie as he did about things large and small, Trump appears to be an enormously skilled developer even though he has very poor investment strategies. Donald Trump’s early rise came about as the result of timely speculation and not because of his deal making strategies. During the early eighties the Real Estate market was hot and gave Trump the window of opportunity he needed. Donald Trump possesses the ability to identify profitable ventures a mile away. His aggression and one-sided focus are what allowed him to break down the existing barriers to obtain his goals of becoming successful as a developer. With all that said there is a sad and dark side to Donald Trump, I believe he suffers from an obsessive compulsive disorder. His OCD is to buy and build whatever comes to his mind is just plain crazy. His actions time and time again have proven that when he sets his sights on something; he just goes for it no matter what. Trump does not have any set strategies. Donald Trump’s impulsiveness is what many times does not let him see what will happen after he makes that first pivotal step in any direction. His OCD is best seen in his impulsive purchase of a bankrupt Eastern Airlines and a huge yacht he was never able to put into profitable use.
Donald Trump is the third generation of an entrepreneurial family. His family’s achievements and success reflect one of the biggest changes America has ever seen, from the Gold Rush in Colorado to affordable housing in Queens. Donald Trump was born in Queens, New York on June 14,1946, the day the nation united to celebrate its flag, Flag Day. Donald Trump has added to his parent’s legacy of finding the demand in the market and infusing the supply it needs. The name Donald Trump has made for himself is unsurpassed to this day.
Donald Trump grew up assisting his father in his business ventures. Trump had a very comfortable childhood and was sent to a military academy where he learned discipline and completed his middle education. In military school he learned the true meaning of competition and how aggressive you must be to get what you want. While assisting his father Trump realized he did not like the rougher aspects of his father's business. Some of the jobs he did not like included rent collecting and the physical labor involved. Trump had a great interest in real estate and decided he would like to be involved in the Real Estate business but at a larger scale than his father had ever been. He studied finance at the prestigious University of Pennsylvania's Wharton School because of this.
During his college years, Donald Trump and his father decided to purchase an apartment complex in Ohio which was in bankruptcy. The purchase of this complex is striking because they obtained financing above the purchase price so they could do the necessary remodeling to the run down complex. The development purchased by Donald Trump with his father’s aid was called Swifton Village, a 1,200 unit apartment in Cincinnati, Ohio. It was purchased at a foreclosure sale for less than $6 million and sold within a year and half for about $12 million dollars. Without a penny of their own invested they were able to turn the apartment complex around by taking a strict approach at rent collection and by remodeling the appearance of the complex. Trump was able to see how the government would assist buyers in purchasing property with little or no financial backing. and best of all how do get such aid. This incident was the beginnings of the Donald Trump we know today. This event proved to be the single most important lesson Donald Trump learned
Donald Trump is known as the all American real estate developer. Donald Trump has shaped New York City into the likes of a modern impressionist painting. All his developments and projects have been new, original, modern, and awe inspiring. Donald Trump was one of the first developers to incorporate an indoor waterfall as a back wall to a restaurant which can be found at the Trump Plaza. Donald Trump breaks the rules of construction and development but always seems to manage to do the right thing. Trump’s actions have always proven to be one of the most reckless and aggressive approaches a real estate developer has ever shown. Is he crazy or does he have an incredible amount of foresight? Buying buildings, casinos, and property just because he can conceive the idea of ownership in his head proves he may be a little bit crazy. This proves Trump’s personal self gratification and not his intelligence is what has made him millions. This strange quality which Trump possesses has given him the edge he has needed and needs to keep going. Trump’s strive for greatness has pushed him to become the national emblem that represents cocky wealth.
Donald Trump didn’t always have it this easy. Even though Trump’s first investment had great success he was not satisfied. Donald decided it was important for him to be on his own. Trump always had his sights set on New York City. Trump believed New York City would be his gold mine. He rented an apartment in Manhattan. The apartment was dingy and old by his standards and he was embarrassed to bring people there. This move to Manhattan brought him into the heart of New York City and he was able to become familiar with all of the properties in his area. He would walk the streets to make note of the buildings and their condition. Always keeping his eyes open for the right investment. He decided these steps would be very important in making a name for himself.
His first attempts at becoming a developer in the early eighties in New York City went unnoticed. Even though his bids were lower and offered more then his contractors he lost out every time. Even when Donald Trump offered his advice the city would not accept it. It seemed his earlier acclaimed fame and luck had diminished. Why? Could it have been because he was the young new face in town? Donald Trump’s youth and inexperience put doubts into the minds of other older more experienced developer. Surprisingly, this did not deter Donald; he became even more determined and aggressive similar to the likes of a spoiled child throwing a tantrum when he does not get what he wants.
Trump’s goal, was to make his mark on New York City. His persistence proved fruitful. At the age of 28 New York City finally gave Trump his chance. He had convinced the city to build a convention center on what use to be the defunct Penn Central Rail yards, which he had secured for his own benefit with options. But, that was not all Trump was able to do, he also convinced the city and the Hyatt Corporation to renovate the Commodore Hotel, which later became known as the Grand Hyatt Hotel. Finally, after these two projects were accomplished Donald Trump’s presence and skill was known. He had proved that he was someone to be reckoned with and was rapidly becoming New York’s newest real estate tycoon.
Donald Trump’s ultimate show of power was when he built the Trump Tower, on Fifth Avenue. This project was what finally provided him with the national attention he had dreamed of for so many years. It contained a mixture of stores and million-dollar apartments; this building became Donald Trump’s trademark. Trump Tower brought forth masses of tourist and was his final show of what great financial success is. When competitors tried to beat him out of the market and lowered their prices he simply raised them. Donald did not once lower his prices. He felt that affluent people, which was the market he was trying to attract would not be concerned with price. This proved he had the ability to understand the psychology of the wealthy. Donald Trump had found his niche and was going to exploit if for as long as he could.
At the peak of his wealth in the year 1989, Trump's billion dollar empire included Trump Parc which contained more than 24,000 rental and co-op apartments, the Trump Shuttle Airline, ownership of the New Jersey Generals of the United States Football league, casinos in Atlantic City, Trump Castle, and his luxurious private homes. Trump's The Art of the Deal was his way of educating the public on business dealings and how to achieve success. I believe this was his conceded attempt to lecture America and rub his financial success in the faces of all who snubbed him. Trump states his style is very basic, in his own words he describes his approach by saying, "I aim very high, and then I just keep pushing to get what I am after" (The Art of the Deal). Donald Trump is a firm believer the deal making is an ability you are born with, it is in the genes. But obviously it was his personal whims, which played a major role in the reasoning behind his acquisitions and their management.
Trump was flying high and finally felt he had achieved everything he wanted. At the speed of light he acquired and developed assets that he had no experience in managing. This caused him to soon lose sight of it all. He was unable to balance his current assets against his outstanding debts that were rapidly coming due. The real estate market boom was heading toward a bust and the rampant tidal waves of the declining market claimed the investments of many and now Donald Trump was directly in its path of destruction. The first sight that something was wrong in Donald's glittery glamorous life started surfacing at the same time the press began reporting his personal problems to the world. Once the break up with his wife and Trump’s reported affair with Marla Maples came to light it distracted him even further from his already crumbling empire. Where were his investment strategies now? They were nowhere to be found. The reality was, Trump was stretched so thin using his name and his persona as a personal guarantee that the foundation of all of his project might as well been made out of sawdust. Donald Trump had no idea what to do. His empire was slipping through his fingertips and the most powerful man in New York was helpless.
During Trump’s near bankruptcy problems the big New York banks were not too far behind. They had lent fortunes to Trump, without paying sufficient attention to where profits would be coming from or how tight an operation Trump was really running. Banks that never lent money for gambling businesses before lined up to fund Trump's empire, more for his name, his golden touch and because of his earlier estate deals than something more concrete. Trump built huge casinos and gleaming apartment buildings, brought world-famous hotels and a fleet of planes and plastered his name over everything. Is this the sign of a man with great business or an over inflated ego? The banks were so blinded by Trump’s charm and past achievements that they felt it would be the easiest buck they would ever make. This later proved to be the worst mistake the Banks could have made. It was as if the Banks had signed their souls to the devil. They were in such an awkward position, if Trump went down so would they.
By 1990 Trump was facing bankruptcy, unable to meet payments on more than $2 billion in loans that were owed to the banks. He was able to secure some emergency financing on various occasions but in return he had to give up the operation and control of most of his real estate to the creditor banks as well as 10 percent of all revenue earned. Trump gradually gave up control of considerable parts of his empire including the Trump Shuttle, casinos, and The Plaza in order to secure more favorable debt financing to cushion his near bankruptcy situation. The lenders were cracking down hard and it had become a tug of war over whose name would be more tarnished, theirs or Donald Trump's. The banks wanted to lend Trump more money but they too had become constrained. The savings and loan crises had caused federal regulators to monitor banks closely, which led to them ending practices with Trump very abruptly.
What lead to Trump's downfall and near catastrophic ending in the early nineties? I believe it was in part because of his non existent strategies. For example by putting the word "Trump" on a building or an airplane he thought this would immediately make him money. There was no concrete backing to his notions and what made it worse was the public bought into it. This proved what a great sales person Trump was in selling and displaying his image to the public but never proved that he was the wonderful business savvy person he portrayed himself to be. Trump was no magician nor was he born with an instinct for real estate as he believed. Donald Trump was simply a speculator who was bound to eventually get knocked down by debt and the normal business cycle. Forbes magazine had charted Trump's rise and estimated that his increased debt and a drop in real-estate values caused Trump to lose more than two thirds of his net worth, from $17 billion in 1989 to $500 million in 1990 (Forbes April 3, 2000).
Donald Trump I believe has helped the arrival of a new age and has brought forth the most unforgettable era in real estate but the cost was almost to high for him to pay. He wanted to accomplish too much too soon with very little planning ahead. Not being able to place proper thought on things is not the best way to start of any type of project especially not multimillion dollar ones. Donald Trump was very smart with dealing with people but until he learns to control himself and focus history may repeat itself. Trump’s aura and image lures many people to invest in his ventures. This blinding affect although great for Trump and his ventures can be deadly to investors.
Trump is the perfect example of how fast a heavily borrowed fortune and the fame that comes with it can very easily disappear if one is not careful. Despite all his misfortunes, Trump at the age of 53, a good decade and a half after he came to national prominence, Donald Trump is possibly the most famous businessman in America. According to the Gallup Organization, 98% of Americans know who he is. None of the other masters of American business like Jack Welch, or Warren Buffett, and Steve Jobs, or even Ted Turner come close. The most impressive aspect of Trump's celebrity status is not his grandeur but its durability. Donald Trump will be a name that will resonate through time. This is best illustrated in this quote, "He has far outlasted the decade that produced him, but--unlike other products of the 1980s who've managed to stay in the limelight through self-reinvention like Michael Milken "the junk bond king". Trump has done this without any discernible personal growth. Like a cryogenically frozen body, he stands as a perfectly preserved specimen of the era (Forbes)." In this new age where wealth is paper, and most assets move electronically Donald Trump's tastes and love of money can be looked upon as a refreshing change. His love of money, success and fame will always keep Donald Trump thinking of bigger and better projects to surprise the public and have the city pull its hair out.
Among Trump's peers, other rich business people like himself, the situation is very different. When Fortune magazine asked several thousand of them to rank 469 companies for its 1999 list of Most Admired Companies, they put Trump's casino company last. They ranked it worst in quality of management, in use of its corporate assets, employee talent, long-term investment value, and social responsibility. This again proves Donald Trump does not use any business strategies in his purchases. He just speculates as to what will be hot and what will not. Trump’s wealth allows him to invest in many places and usually one out five investments will be a hit which will cover all his other loosing assets. Trump tries to shrug off such opinions, in one of his books, The America We Deserve he states, "Rich people who don't know me never like me. Rich people who know me like me." Does this mean he doesn't get the recognition he deserves as a businessman? "I don't think anybody knows how big my business is," Trump replied. "People would rather talk about my social life than the fact that I'm building a 90-story building next to the U.N. ... They cover me for all sorts of wrong reasons (The America We Deserve)."
Donald Trump’s Associates describe his uncanny ability for spotting and sorting out waste as well as his outstanding memory. Trump is so detailed that he routinely requires the city to close loopholes only he had the guts to exploit. What is true for Donald Trump is that he will not usually play it safe. Because of this insecurity Trump walks the construction sites every day, yelling that the concrete is the wrong kind, that the marble isn't flat enough, that the ceiling should be ripped out and redone. Trump must be in every part of the deal. He literally believes, if you want the job done right you do it yourself. Because of this you see Trump always brings the sheer power of his persona forth. He negotiates with subcontractors himself instead of relying on a purchasing department and isn't opposed to using his celebrity status to better the terms wherever he can. To seal one deal, Trump agreed to call the subcontractor's mother and wish her a happy birthday. "He has this ability to relate to the doorman, to the guy who's carrying the iron or steel, and make that guy feel good and important (Colony Capital CEO Tom Barrack).
While Trump's lifestyle hasn't changed much since the 1980s, his dealmaking approach has. He has become a bit more cautious of the sort of leverage that pushed him close to bankruptcy in the early 1990s, he refrains from putting up large sums, instead he tries to partner with financial backers among them is General Electric's pension fund. Many of who want to tap the power of his name as well and also retain him as a sort of jungle guide. In one instance, developers paid Trump a flat $5 million licensing fee for the right to brand a Trump Tower in Seoul. Trump's opponents will usually seize these opportunities to label him as a mere front man for financial interests. Trump has become to them a brand slapped on buildings he doesn't own, which in turn many times sends Trump into spasms of outrage. "I own at least 50% of everything I do," he says, not quite accurately. Trump is always defending himself by saying, "I'm the biggest developer in the hottest city in the world."
In truth, Trump's strategy resembles a village than a fast-expanding game of SimCity, which is to say he has a lot of big projects in the works. On Manhattan's East Side, he and partner Daewoo are putting up Trump World Tower, the 90-story massive building that is going to cast a shadow on the United. Over on the West Side, he and a group of Hong Kong investors have two buildings into an 18-building residential project along the Hudson River, which again creatively is titled Trump Place. This project will fill up on of Manhattan's last big parcel of undeveloped land. Condo sales from both are benefiting from the hottest real estate market anyone can remember once again the advantage Trump had in the eighties. As for the three trophy properties Trump calls "my other children" Trump Tower, 40 Wall Street, and the General Motors Building, which he purchased in 1998 with insurance company Conseco, he has successfully succeeded in jacking up rents. His attention to detail and to what potential tenants will want has remained impeccable.
Even though in some aspects he is doing well still Trump's self-defeating tendencies are evident with his casino company, Trump Hotels & Casino Resorts. Trump took it public in 1995 under the ticker symbol DJT. It was Trump's salvation at the time, raising $140 million that he used to pay off his creditors. Without the casino company, Donald would most likely not be alive today in the way we know him. Surprisingly after near bankruptcy and downright dumb investments his underlying assets are in decent shape. Trump's three New Jersey casinos command nearly a third of all gaming revenues in Atlantic City and a slow-growing market has withstood challenges from new megacasinos. All are well-run operations which have top skilled management; the New Jersey Casino Control Commission says they all have clean records. The Taj Mahal which has about 4,500 slot machines, throws off nearly $100 million in cash annually; the smaller Trump Marina has doubled its own cash flow to $53 million in just three years. If you add in Trump Plaza and a riverboat outside Gary, Ind., the company generates more than $240 million in cash a year. Donald Trump is not just blowing smoke when he says there is a lot of money to be made in this type of business.
True, some of his investments may be a cash cow, but most of the revenues earned goes toward the care and feeding of another beast. The $1.8 billion in high-yield debt that has weighed the company down almost since its inception. The debt servicing eats up $216 million of the cash flow, leaving the company with very little capital to reinvest in its properties and even less in earnings for shareholders. The company lost $134 million after depreciation and special items in 1999, and the S&P recently lowered Trump's bond rating from junk to junkier.
The most unnerving thing about Trump has been the accusations in the press about Trump's tendency to use the casino company as his own personal piggy bank. If you look at the $5 million bonus he drew one year, or the fact that the pilots of his personal 727 are on the casino company's payroll this little bit of gossip can hardly be overlooked. In 1996 he sold the Trump Marina to the company for what many shareholders considered to be a very high price. Trump insists it was a "good deal." Trump has angered investors in 1998 when he had the already cash-strapped company lend him $26 million to pay off a personal loan from Donaldson Lufkin & Jenrette. The weird thing is Trump denies misusing company funds and says he'll repay the $26 million when it comes due May 15. What does this say about Trump’s character? Donald Trump knows how to use the situation to the best of its ability. As if all this weren't enough to rubs Trump's Street credibility in the mud, the company was also accused of overstating last year's third-quarter results when it failed to disclose that $17 million in revenues came from a one time event.
A couple of people close to Trump which hold him at high regards suggest that he's unfit to be running a public company. Given that the low stock price seems partly a function of Wall Street's allergic response to Trump's showiness analysts have named it "the Donald factor." Many believe the solution is obvious, it would be better for Trump to remove himself from management. Industry executives speculate that this step alone would bring a 30% bump up in the stock. But Trump has always chosen the opposite track. To macho to prove he may be out of his league even after having paid little attention to the casinos for several years, Donald Trump now promises to become more involved with them. Now it appears Trump will attempt to deleverage the company by unloading one of the casinos within the next six months.
Another puzzling aspect of Trump's public image is that even though he runs two companies which employ 22,000 people together, you never get the sense of an organization underneath him. It is easy to come to the conclusion that he's not only a sole proprietor but a sole employee. Both current and former employees describe Trump as a loyal but not especially well-paying boss, citing stories of birthdays remembered, of sick relatives visited in the hospital. Yet some of them shrug at the popular perception of Trump as a one-man show.
Oddly enough for a man who all but lives in the media, Trump has no public relations to speak of. In a day when even petty tycoons protect themselves with platoons of spokespeople and media people, he relies only on his longtime assistant Norma Foederer and returns most reporters' calls personally, making him one of the most accessible businessmen anywhere. How ironic a man of his statue and money has to prove himself to the world everyday. Donald Trump is a very goal-driven person and I believe will always resurface no matter how his investments turn out. Trump summed his future in these few words, "Anyone who thinks my story is anywhere near over is sadly mistaken."
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>>> Retail Opportunity Investments Corp., a real estate investment trust (REIT), engages in the acquisition, ownership, and management of necessity-based community and neighborhood shopping centers in the eastern and western regions of the United States. As of December 31, 2011, its portfolio consisted of 30 owned retail properties totaling approximately 3.2 million square feet of gross leasable area. The company has elected to be taxed as a REIT, for U.S. federal income tax purposes. The company is based in San Diego, California with additional offices in New York City; Rancho Cordova, California; West Linn, Oregon; and Federal Way, Washington. <<<
>>> Attention America's Suburbs: You Have Just Been Annexed
by Tyler Durden
07/24/2015
http://www.zerohedge.com/news/2015-07-24/attention-americas-suburbs-you-have-just-been-annexed
Submitted by Stanley Kurtz via NationalReview.com,
It’s difficult to say what’s more striking about President Obama’s Affirmatively Furthering Fair Housing (AFFH) regulation: its breathtaking radicalism, the refusal of the press to cover it, or its potential political ramifications. The danger AFFH poses to Democrats explains why the press barely mentions it. This lack of curiosity, in turn, explains why the revolutionary nature of the rule has not been properly understood. Ultimately, the regulation amounts to back-door annexation, a way of turning America’s suburbs into tributaries of nearby cities.
This has been Obama’s purpose from the start. In Spreading the Wealth: How Obama Is Robbing the Suburbs to Pay for the Cities, I explain how a young Barack Obama turned against the suburbs and threw in his lot with a group of Alinsky-style community organizers who blamed suburban tax-flight for urban decay. Their bible was Cities Without Suburbs, by former Albuquerque mayor David Rusk. Rusk, who works closely with Obama’s Alinskyite mentors and now advises the Obama administration, initially called on cities to annex their surrounding suburbs. When it became clear that outright annexation was a political non-starter, Rusk and his followers settled on a series of measures designed to achieve de facto annexation over time.
The plan has three elements: 1) Inhibit suburban growth, and when possible encourage suburban re-migration to cities. This can be achieved, for example, through regional growth boundaries (as in Portland), or by relative neglect of highway-building and repair in favor of public transportation. 2) Force the urban poor into the suburbs through the imposition of low-income housing quotas. 3) Institute “regional tax-base sharing,” where a state forces upper-middle-class suburbs to transfer tax revenue to nearby cities and less-well-off inner-ring suburbs (as in Minneapolis/St. Paul).
If you press suburbanites into cities, transfer urbanites to the suburbs, and redistribute suburban tax money to cities, you have effectively abolished the suburbs. For all practical purposes, the suburbs would then be co-opted into a single metropolitan region. Advocates of these policy prescriptions call themselves “regionalists.”
AFFH goes a long way toward achieving the regionalist program of Obama and his organizing mentors. In significant measure, the rule amounts to a de facto regional annexation of America’s suburbs. To see why, let’s have a look at the rule.
AFFH obligates any local jurisdiction that receives HUD funding to conduct a detailed analysis of its housing occupancy by race, ethnicity, national origin, English proficiency, and class (among other categories). Grantees must identify factors (such as zoning laws, public-housing admissions criteria, and “lack of regional collaboration”) that account for any imbalance in living patterns. Localities must also list “community assets” (such as quality schools, transportation hubs, parks, and jobs) and explain any disparities in access to such assets by race, ethnicity, national origin, English proficiency, class, and more. Localities must then develop a plan to remedy these imbalances, subject to approval by HUD.
By itself, this amounts to an extraordinary takeover of America’s cities and towns by the federal government. There is more, however.
AFFH obligates grantees to conduct all of these analyses at both the local and regional levels. In other words, it’s not enough for, say, Philadelphia’s “Mainline” Montgomery County suburbs to analyze their own populations by race, ethnicity, and class to determine whether there are any imbalances in where groups live, or in access to schools, parks, transportation, and jobs. Those suburbs are also obligated to compare their own housing situations to the Greater Philadelphia region as a whole.
So if some Montgomery County’s suburbs are predominantly upper-middle-class, white, and zoned for single-family housing, while the Philadelphia region as a whole is dotted with concentrations of less-well-off African Americans, Hispanics, or Asians, those suburbs could be obligated to nullify their zoning ordinances and build high-density, low-income housing at their own expense. At that point, those suburbs would have to direct advertising to potential minority occupants in the Greater Philadelphia region. Essentially, this is what HUD has imposed on Westchester County, New York, the most famous dry-run for AFFH.
In other words, by obligating all localities receiving HUD funding to compare their demographics to the region as a whole, AFFH effectively nullifies municipal boundaries. Even with no allegation or evidence of intentional discrimination, the mere existence of a demographic imbalance in the region as a whole must be remedied by a given suburb. Suburbs will literally be forced to import population from elsewhere, at their own expense and in violation of their own laws. In effect, suburbs will have been annexed by a city-dominated region, their laws suspended and their tax money transferred to erstwhile non-residents. And to make sure the new high-density housing developments are close to “community assets” such as schools, transportation, parks, and jobs, bedroom suburbs will be forced to develop mini-downtowns. In effect, they will become more like the cities their residents chose to leave in the first place.
It’s easy to miss the de facto absorption of local governments into their surrounding regions by AFFH, because the rule disguises it. AFFH does contain a provision that allows individual jurisdictions to formally join a regional consortium. Yet the rule leaves it up to local authorities to decide whether to enter regional groupings — or at least the rule appears to make participation in regional decision-making voluntary. In truth, however, just by obligating grantees to compare their housing to the demographics of the greater metropolitan area, and remedy any disparities, HUD has effectively turned every suburban jurisdiction into a helpless satellite of its nearby city and region.
We can see this, because the final version of AFFH includes much more than just the provisions of the rule itself. The final text of the regulation incorporates summaries of the many public comments on the preliminary rule, along with replies to those comments by HUD. This amounts to a running dialogue between leftist housing activists trying to make the rule more controlling, local bureaucrats overwhelmed by paperwork, a public outraged by federal overreach, and HUD itself.
Read carefully, the section of the rule on “Regional Collaboration and Regional Analysis” (especially pages 188–203), reveals one of AFFH’s key secrets: It doesn’t really matter whether a local government decides to formally join a regional consortium or not. HUD can effectively draft any suburb into its surrounding region, just by forcing it to compare its demographics with the metropolitan area as a whole.
At one point (pages 189–191), for example, commenters directly note that the obligation to compare local and regional data, and remedy any disparities, amounts to forcing a jurisdiction to ignore its own boundaries. Without contradicting this assertion, HUD then insists that all jurisdictions will have to engage in exactly such regional analysis.
Comments from leftist housing activists repeatedly call on HUD to pressure local jurisdictions into regional planning consortia. At every point, however, HUD declines to demand that local governments formally join such regional collaborations. Yet each time the issue comes up, HUD assures the housing activists that just by compelling local jurisdictions to compare their demographics with the region as a whole, suburbs will effectively be forced to address demographic disparities at the total metropolitan level (e.g., page 196).
When housing activists worry that a suburb with few poor or minority residents will argue that it has no need to develop low-income housing, HUD makes it clear that the regulation as written already effectively forces all suburbs to accommodate the needs of non-residents (pages 198–199). Again, HUD stresses that the mere obligation to analyze, compare, and remedy demographic disparities at the local and regional levels amounts to a kind of compulsory regionalism.
HUD’s language is coy and careful. The Obama administration clearly wants to avoid alarming local governments, so it underplays the extent to which they have been effectively dissolved and regionalized by AFFH. At the same time, HUD wants to tip off its leftist allies that this is exactly what has happened.
At one level, then, the apparatus of formal and voluntary collaboration in a regional consortium is a bit of a ruse. AFFH amounts to an annexation of suburbs by cities, whether the suburbs like it or not. Yet the formal, regional groupings enabled by the rule are far from harmless.
Comments from housing advocates (pages 194–197), for example, chide HUD for failing to include a mention in AFFH of the hundreds of federally-funded regional plans already being developed by leftist activists across the country (the “Sustainable Communities Regional Planning Grant” program). These plans entail far more than imposing low-income housing quotas on the suburbs. They embody the regionalist program of densifying housing in suburb and city alike, and they structure transportation spending in such a way as to make suburban living far less convenient and workable. HUD replies that these plans can indeed be used by regional consortia to fulfill their obligations under AFFH.
So a city could formally join with some less-well-off inner-ring suburbs and present one of these comprehensive regionalist dream-plans as the product of its consortium. At that point, HUD could pressure reluctant upper-middle-class suburbs to embrace the entire plan on pain of losing their federal funds. In this way, AFFH could force the full menu of regionalist policies—not just low-income housing quotas—onto the suburbs.
There are plenty of ways in which HUD can pressure a suburb to bend to its will. The techniques go far beyond threats to withhold federal funds. The recent Supreme Court decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project has opened the door to “disparate impact” suits against suburbs by HUD and private groups alike. That is, any demographic imbalance, whether intentional or not, can be treated by the courts as de facto discrimination.
Just by completing the obligatory demographic analysis demanded by AFFH—with HUD-provided data, and structured according to HUD requirements—a suburb could be handing the government evidence to be used in such a lawsuit. Worse, AFFH demands that suburbs account for their demographic disparities, and forces them to choose from a menu of HUD-provided explanations. So if a suburb follows HUD’s lead and formally attributes demographic “imbalances” to its zoning laws, the federal government has what amounts to a signed confession to present in a disparate-impact suit seeking to nullify local zoning regulations. With a (forced) paper “confession” from nearly every suburb in the country in hand, HUD can use the threat of lawsuits to press reluctant municipalities to buy into a regional consortium’s every plan.
Regionalists consider the entire city-suburb system bigoted and illegitimate, so there are few local governments that HUD would not be able to slap with a disparate-impact suit on regionalist premises. It’s unlikely that any suburb has a perfect demographic and “asset” balance in every category. All HUD has to do is decide which suburban governments it wants to lean on. With every locality vulnerable to a suit, every locality can be made to play the regionalist game.
Leftist housing activists worry that AFFH never specifies the penalties a suburb will face for imbalances in its housing patterns. These activists just don’t get it. A thoughtful reading of AFFH, including its extraordinary “dialogue” section, makes it clear that HUD can go after any suburb, any time it wants to. The controlling consideration will be politics. HUD has got to boil the frog slowly enough to prevent him from jumping.
It will take time for the truth to emerge. Just by issuing AFFH, the Obama administration has effectively annexed America’s suburbs to its cities. The old American practice of local self-rule is gone. We’ve switched over to a federally controlled regionalist system. Now it’s strictly a question of how obvious Obama and the Democrats want to make this change — and when they intend to bring the hammer down. The only thing that can restore local control is joint action by a Republican president and a Republican congress to rescind AFFH and restrict the reach of disparate impact litigation. We’ll know after November 8, 2016.
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$SPF Standard Pacific Sees Big January Orders Growth
Add upscale #homebuilder Standard Pacific (SPF) to those reporting strong January order growth, which some economists and builders say bodes well for the coming spring selling season. SPF says during the 4Q conference call had a net 463 contracts signed last month, up 27% from a year earlier and faster than 4Q's 11% order growth. "Sales trends were positive in nearly all of our markets in January," notes CEO Scott Stowell. "2015 is off to a strong start, and we're looking forward to the spring selling season." Shares rise 4.1% to $7.54, moving shares back into the green for 2015.
http://seekingalpha.com/article/2894876-standard-pacifics-spf-ceo-scott-stowell-on-q4-2014-results-earnings-call-transcript?auth_param=21hhj:1adai9a:1cc3cf0705313b05dc841355772c93ac&uprof=45
>>> Sovran Self Storage, Inc. operates as a real estate investment trust (REIT). It engages in the acquisition, ownership, and management of self-storage properties in the United States. The company?s self-storage properties offer storage space to residential and commercial users, as well as offer outside storage for automobiles, recreational vehicles, and boats. As of February 15, 2007, it owned and managed 328 properties, consisting of approximately 20.3 million net rentable square feet in 22 states. Sovran Self Storage has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax to the extent it distributes at least 90% of taxable income to its stockholders. The company was founded in 1982 and is headquartered in Williamsville, New York. <<<
>>> Extra Space Storage, Inc. operates as a real estate investment trust (REIT) in the United States. It engages in property management and development activities that include acquiring, managing, developing, and selling, as well as the rental of self-storage facilities. As of December 31, 2006, Extra Space Storage owned interests in 567 properties located in 32 states and Washington, D.C., as well as managed 74 properties owned by franchisees or third parties. As a REIT, the company would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 1977 and is based in Salt Lake City, Utah. <<<
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