What do the Fed’s recently concluded “stress tests” have to do with commercial real estate? Everything. The stress test results convey the illusion that America’s largest banks possess adequate capital. But that’s not true. And since America’s largest banks possess inadequate capital, they will be reducing their exposure to commercial real estate loans. REIT-holders beware!
Latest data from the housing market shows that the misery is set to continue for a while yet. But Christian Hill says investors can still make money by shorting two real estate specific ETFs (IYR, VNQ). A more speculative play is the UltraShort Real Estate ProShares (NYSE:SRS) inverse ETF.
High yields don’t always mean high value, says Matthew Collins. Some Real Estate Investment Trusts (REITs) now yield an attractive 16%. But commercial real estate is in a perilous position right now. And Matthew says investors should resist the temptation to go bottom fishing just yet. Later in the year, there could be some great opportunities to cash in on a recovery bounce.
Everyone knows the perils of investing in the toxic US housing market. But not many are aware of the opportunities for safe and steady profits that still exist in real estate. Robert Williams says one REIT (real estate investment trust) raised its dividend three times in 2008. And it stands to make huge capital gains when the housing market recovers.
2009 has started out well. If you keep your portfolio on line, you should be seeing green ink from one end to the other.
This is cause for celebration. But poking under rocks to find the losers is interesting. Every industrial group and sector has a smattering of stragglers. And one industry is doing much worse than any other. If you are feeling contrarian, this is where to look for bargains among the unloved–in real estate investment trusts.
Known as REITs, pronounced “reets,” these trusts pass most of their profits through to investors as generous dividends. Among the REIT losers so far this year, the current yields range from 4% to 22%.
The problem with REITs is that to pay out a portion…
Expect more pain in the housing market next year, says Don Miller. Rising unemployment will keep the foreclosures coming. And as the backlog of inventories swells, Don says homebuilders still look ripe for shorting in this environment.
Real estate is a buyers market these days. But selling is a nightmare. If you can afford to hold onto your existing property, Andrew Snyder says it’s better to rent it out until the market recovers. It may require some belt-tightening in the short term, but the concrete gains from waiting will be worth it.
US retailer Target Corp. (NYSE:TGT) is considering offloading $20 billion in real estate holdings. This will enable the company to focus on its core strategic operations, says Andrew Snyder. And that makes it easier for investors to analyse the business. Andrew expects Target’s stock to jump if this sale is given the go ahead.
New home sales rose by 2.7% in September, according to the Commerce Department. Andrew Snyder says this is an important sign of a rebound in the property market. And that means adjusting your portfolio to include real estate investment trusts (REITs) like Post Properties (NYSE:PPS) and American Campus Associates (NYSE:ACC).
Retail sales slumped 1.2% in September. It was the steepest decline for over three years. This is bad news for retailers. Andrew Snyder says this means investors should avoid retail-related REITs such as Simon Property Group (NYSE:SPG).