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Industry Discussions / Real Estate Inv. Trusts: REITs


Subject:  Re: The One Share Club Date:  2/10/2013  3:01 AM
Author:  BenHacker Number:  73658 of 80316

Hey Yoda,

Ben, on some platforms 100% of REIT preferreds are not shortable. They are treated like corporate/muni bonds which are not shortable.

A side note, you can short Corp bonds on IB as well. Generally they require larger size. Issues I have looked at were 100 bond minimums (~$100k minimum) but IB is forging ahead in a lot of these areas so what is usual is quickly changing.

A large concern is the illiquidity. The brokerage does not want to let the investor get into a short squeeze position where you literally might not be able to cover the shorts at any price.

IMO, there is limited demand at typical retail brokers for this service and that is why they don't bother trying to get decent lending inventory. It's not about protecting people from their loans being called or squeezed... although maybe the increased customer service also makes it not worthwhile.

I had not checked shortability on IB recently, so I was NOT aware they offer it. Have you actually shorted any to verify they will let the trade go through? I will attempt to place a few short trades.

I've shorted a lot of weird stuff on IB, so I have no doubt it will work, but I have not personally shorted a REIT preferred specifically.

I do know that IB has restricted margin on some REIT preferreds. Even though they are NYSE traded issues and should b