ROIC down $.15 today on above average volume and the day is not yet over. What really caught my eye is the stock is now trading below 50DMA, and today would mark the 3rd day in row if it finishes below 12.72.I know REIT's had a bit of sell off and folks who are afraid of tax consequences are taking profits. But is there something else that i am missing?Are we at an inflection point on REIT's and REIT Preferred Yields? OR this too shall pass and we will have our new normal of 5.5% to 6.5% yield back?
CM asked: <What really caught my eye is the stock is now trading below 50DMA, and today would mark the 3rd day in row if it finishes below 12.72.CM, I have zero company specific knowledge about ROIC. I know that the elephant in the room is how they handle the warrants that are outstanding.Based strictly on price, I see nothing to worry about on ROIC. I used the same data I presented yesterday on MREITS. It was the price change from the day before QE to infinity (9/12/12) was announced through yesterday's (10/24/12) close.Here are the pertinent numbers for ROICEquity REIT Index (VNQ) = -2.56%Median Equity REIT = -2.58%ROIC = +0.79%ROIC is outperforming since QE was announced. If there was something specific to ROIC, I would have expected to see it substantially underperforming other equity REIT’s.I would say that as equity REITS go, so will ROIC go. Of course there is the chance that they will announce something major regarding the warrants on the 11/1/12 Q3 Conference call. If they do that, obviously it might have a dramatic effect up or down.Thanks,Yodaorange
Thanks Yoda. I should have checked it agains the REIT index. I will remember that nex time.
I know REIT's had a bit of sell off and folks who are afraid of tax consequences are taking profits. But is there something else that i am missing?I don't think you are missing anything. REIT stocks have, indeed, sold off. However, it isn't due to widening interest rate spreads, or to worries over exports (REITs, obviously, don't export anything), or to a belief that a recession is near (S&P 500 stocks haven't declined all that much), or to a pending rise in real estate cap rates (they remain low in a low-interest rate environment), or to bad earnings (most REITs reporting thus far have NOT guided lower, and have met their guidance numbers). CRE remains in muted recovery mode. Thus I cannot think of any reason for REIT stocks' sell-off other than profit-taking (whatever that means).Are we at an inflection point on REIT's and REIT Preferred Yields? OR this too shall pass and we will have our new normal of 5.5% to 6.5% yield back?I see no reason to expect any significant inflection point. The New Normal economy continues, investors continue to favor stable cash flows and above-average dividend yields, and REIT stocks should be able to continue to grow their earnings at something like 4-5% annually going forward (barring a recession due to falling down the fiscal cliff). New supply of competing real estate is modest, and lending to merchant developers is still tenuous. Rents are not strong enough to justify new development except in the apartment sector. Spreads on Baa-rated bonds continue to be narrow relative to T-notes, which haven't moved up or down over tha past couple of weeks. So I don't expect any diverstion away from what we've seen during most of this year.But, like all forecasts, this one isn't worth the paper it's printed on.Ralph
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