The usual's BRX, KIM. I have sold CTRE around $22, I wanted to buy back today morning, I should have, greedy holding on for further price decline. In any case, I will be able to buyback the additional 15% shares now for the same $$$ or increased my dividend income by 15%!!!!
Yesterday I bought 1) a lot of medium sized banks with conservative loan portfolios 2) some life insurance companies with substantial asset management/retirement part of the business; a large annuity part of the business and considerable reinsurance for the life insurance portion of their businesses and 3) One REIT - KIM. This morning, I was looking to buy a lot of non-financial companies, but only got one Hanes (HBI). No energy, it could get very bad in the oil patch. The next 12 months could be a replay of 72/72 or 1999 when oil went to $1 and under $10 respectively. Today's $20 would be about 1999's $10.
REIT sector wise, data centers, cell phone towers, apartments should not be impacted. Malls are going to be worst impacted and grocery anchored strips will do okay, but even they could face some small shop's bankruptcy.
Outside of REIT's look at banks. Citi TBV (tangible book value) @ 2019 is $70 and will go to $75 by end of 2020. Now the stock price is $55, the dividend yield is 3.7% and they are buying back their stock at steady clip. They can reduce their share count by 8% to 10% each year for next 3 years, and grow their dividend by at least 10%.WFC, Wells Fargo, @35 sporting an dividend yield of 5.8% and they will be aggressively buying back shares. Wells is restrained by FED from expanding their balance sheet, so all the cash they generate will be returned to the shareholders in the form of dividend and buybacks.Compared to REIT's right now these banks sport solid dividends, they have a future where they will continue to grow, increase their dividend, and reduce the share count, further accelerating EPS growth, and dividend growth.I will be buying banks in the coming weeks on any weakness.
REIT sector wise, data centers, cell phone towers, apartments should not be impacted.At least until all those people in the gig economy, or who work at places where people frequent and are shut down, can't work because of coronavirus, so they can't pay their rent, or their cell phone bills.AJ
You can skip a mortgage, not rent or cell phone bills. You will be evicted and phone companies will shut the service.
You can skip a mortgage, not rent or cell phone bills. You will be evicted and phone companies will shut the service.If you have no money, because you have no income and no e-fund (or have run through your e-fund), you skip any and all of the above, because you have no money to pay them. Foreclosures occur, cell phones get shut down and people are evicted from apartments every day right now, in an economy that hasn't gone into recession. If we do go into recession, those are all going to get worse, and apartments and cell phone companies won't be immune. They may be less impacted than retail, but they still aren't immune.AJ
The great majority of businesses are adversely affected by recessions. A lot of individuals are, but not as high a percentage. If we are getting ready to go into a recession, and we probably are, there are differences between now and 2007.Homeowners are stronger. Credit scores are higher going in. Almost all home buyers had the income to repay their homes, at least they did when the home loan was originated. Back in 2007, that was not true. For 2 or 3 years, I prepared my banks ALLL - Allowance for Lease and Loan Losses. Back in 2008-2009, I probably reviewed the Call Reports of 40% of the US banks that failed in those years. Sub-prime home loans were not a major cause of bank failures in the GFC. What caused most banks to fail back then were loans in two areas. The first area that caused the most failures was Residential Construction and Development Loans. These included loans for subdivisions and construction of residential structures of 1-4 units. Subdivisions were the worst, in my area and many others you could not give away an empty lot back then. Home construction could be divided into two categories: spec homes where the borrower were builders building homes for resale and custom homes where the borrower was going to be the actual occupant of the home. While problems occurred with custom homes they were minor compared to spec homes. Spec homes and subdivisions cratered a lot of banks. The second area that hit the failed banks hard, but normally less than residential development, were two forms of residential loans - HELOCs and 2nd mortgages. Closed-end 1st mortgage loans, which at most banks included investment properties and homeowners with weaker credit, were not a major problem. Why did banks equivalent of sub-prime borrowers cause less problems than those securitized by most mortgage brokers? We ate our own cooking (ie kept the loan on the books), and worried about down payments and proving income. As a lender I can assure you that given the choice of making a home loan to a borrower with a 750 credit score and no down payment and making one to a borrower with a 650 credit score and a 15-20% down payment, I would take the latter close to 100% of the time. Today banks have more construction/development loans on the commercial side than the residential side. Those commercial loans could be to a business that plans to occupy the building, this would be the equivalent to the residential loans that were customs. A recession would increase problems, but they would not likely cause great problems. The commercial construction loans that I would worry about would be those where most or all of the property is going to be rented to tenants. This is the area where most real estate loan losses will occur the next time in my opinion. I have noticed that debt levels have increased over the last 3-5 years for most of the companies that I have been looking at this year. This is probably mostly the result of low interest rates and buybacks. Federal and corporate debt have risen in this country over the last few years. This could be problematic in the next recession, which may very well be upon us. While share prices are falling and buybacks kind of make more sense there may be less of them than some might think. I think for most companies, they will have to focus more of their cash resources to keeping operations going and to the balance sheet. For most they should have committed more of their cash over the last few years to the balance sheet and less to buybacks.
I have stopped buying MACHowever I continue to buy SPG and picked up some at a price of 100 a share giving a yield of over 8%.Malls are clearly going to get slaughtered in the near term and of course SPG share price may continue to drop. This is not a zombie apocalypse and at some point quality malls will likely thrive again. The drop in the market usually comes before the recession. Could we face a depression? I hope not.This fool will continue to buy with whatever funds come available as the market continues to drop.Either at some point the market will rebound or to plagiarize a former respected REIT GURU we may all be eating dog food.Martin
Malls are clearly going to get slaughtered in the near term...Well, prices of shares of mall REITs may get slaughtered in the near term. Whether the underlying businesses get slaughtered is, importantly, a different question. Some fragile businesses that rent mall space may succumb. I think that the vast majority will survive, and they'll pay their rents.
Chuck light tuna is cheaper than dog food. :)
The sell off in BRX, KIM seems to be excessive and clearly folks confused with Malls. But no need to rush in. Will wait to see if we get $10.
KIM did hit $10 and I bought 1,000 shares at $10.31.
One quote earlier this morning that really confused me (to the point of hesitating to grab it) was CUBE, down over 15%. I couldn't figure out what was going on. But 10 or 15 minutes later, it was back up to a more reasonable 5-6% down. I see now that the low of the day was 24.02, down an astounding 22%! Someone must have really, really wanted out, at any cost!Needless to say, healthcare REITs are getting hammered, even worse than malls. VTR as I type is down nearly 23%, yielding somewhere around 11%. WELL is down 20%, yielding north of 7.5%. And the list goes on ....Scary times to buy anything, but it's hard not to dip my toes in a bit.Ken
KIM did hit $10Interesting -- KIM's intraday chart looks a lot like CUBE's. I'd speculate there was some sort of emergency liquidation order from an ETF or other large fund that needed to get out of some positions. Congrats on your trade. You could close it out now (if you haven't already) for a quick 25+% profit!Ken
That's lottery! I think lot of margin liquidation is going on. The price decline is beyond many models. I am wondering which hedge fund(s) are behind this. They should be printing billions by the hour.
Ken, After seeing KIM's and CUBE's charts I thought the same thing that a big REIT ETF was being hit with redemptions, but then I looked at a few other REITs and they were not down near as much so I am leaning away from the ETF explanation. Its been years since we have seen something like this. Great to have cash.VM
VM,I think you're right, it wasn't a REIT ETF fund, but instead some sort of fund that held some REITs. I've seen a couple of other REITs with similar large, fast spikes down and rebounds back up. CPT is one that I remember, but there were more.Great to have some cash, but less great not to know what to buy (been away from REIT fundamentals for too long). :)Ken
I understand that it's tied to oil, but CORR has really been taken to the woodshed.Yielding over 16% right now
Check out corr.pra---over 16% also.Callable---but if they did you would more that double!Chuck
Sold a little more gold today and bought a little WELL and VTR
Bought IIPR today at $66.00. 6 percent dividend now.Andy
Senior living REITs are selling off hard on covid19 liability risk is my guess.Even though they're not the operators.
Senior living REITs might not be selling off solely based on liability risk. Unfortunately it could also be a decrease in demand. Lets hope not.
The economy will come back, but how many companies will survive to participate in that comeback? I don't know. Which REITs have the balance-sheet strength and/or the tenant strength to weather this and come back without permanent impairment?
Just looking at BRX, $400 operating expense, $190 M interest expense versus current revenue of $1168m. Now, assuming they are going to lose 40% revenue, they can still break even cash flow wise; Right now, there is so much uncertainty, the operating assumption is we will not open for another 3 months, and even if we open it is going to take 2 to 3 years to get the economic activity back to normal.Is this a correct assumption?
Once we are past the social distancing, the recovery of economic activity depends on demand. Demand depends on the willingness of government, consumers, business and foreigners to spend. Damage to private balance sheets will be a drag on private spending. It will be a great time for government to borrow at very low interest rates and spend to fill the demand gap (on, one hopes, useful things that will add to our prosperity and safety in the future). Whether government will step up spending, is a political question. I am optimistic the politics will play out favorably for that outcome.
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