This is set up for those wanting to chat about Real Estate Investment Trusts (REITs).

Try to keep this chat line open for REIT discussions–only rule is to leave politics aside.

444 thoughts on “REIT Chat”

  1. LANDP coming soon.

    May 30, 2023 / Gladstone Land Corporation (Nasdaq:LAND)… today announced that it has applied to list its 6.00% Series C Preferred Stock … on the Nasdaq Global Market under the ticker “LANDP.” Pending Nasdaq approval, the Company expects the listing of its Series C Preferred to be effective on or about June 8, 2023, […]

    The Company originally issued the Series C Preferred at $25.00 per share through a $255 million continuous registered non-listed offering, beginning in April 2020, which was completed in December 2022.

  2. REXR-C being offered at 22 for a 6.4% yield.

    Not bad if you are into real assets and want super high quality.

  3. Was going to post a link about Blackstone being “in talks”, looking to turn a big Chicago office property back to the lender or cut a deal, but there are a lot of these “big guy gives back the office keys” stories these days. And Koneko Research, mentioned by another poster here, has done a good job of summarizing the office REIT crisis. Hint: think Class B shopping mall REITs.

    So, for something different, a WSJ article on apartments, supposedly the safest of all real estate investments, many located in supposedly the safest of all areas, the Sunbelt.

    The story here is of investors who bought into private real estate deals, to the tune of $115 billion in recent years. Some are now finding their investments sinking as floating interest rates, taxes and insurance rise. (Not to worry though, some people do well: the syndicators collected upfront sales commissions and management fees. ) The larger issue here: whether yet another real estate sector is in the early stages of starting to crumble.

    “A Housing Bust Comes for Thousands of Small-Time Investors. They were offered the benefits of owning apartment-building rentals without any of the work, in real-estate investments that have already left some people empty-handed.”

    “Bonds Backed by Apartments Are Under Stress as Housing Market Cools.
    Nearly $88 billion in securitized mortgages are estimated to be at risk of default, with 42% tied to apartment buildings.”

    Paywall warning: may require subscription.
    Just my opinion. DYODD.

    1. Important to note that ABR was the lender in question regarding the Houston foreclosure and is mentioned in the second WSJ article.

      Also – and I hate to jump on the AI bandwagon – AI can’t be helpful for office REITS as office employees that do return to work could potentially be replaced by AI Chat Bots.

  4. News article out in the Real Deal about office REIT Vornado, VNO, which cut its divvy last month. Goldman expresses concerns that VNO could breach debt covenants. It notes rising interest costs affecting re-fis of hedges, lost tenants and costs of on going projects. (In short, things you probably already worried about when reading the news on office REITs.) VNO dismisses the Goldman report.

    “Vornado warning: REIT slipping toward debt breach. Climbing interest expenses, tenant move-outs could squeeze debt buffer to dangerous level, analysts say.”

    Sentiment on offices: “The thrill Is gone. The thrill is gone away. You know you done me wrong, baby.” Just my opinion. DYODD.

  5. Quite a bit of office news out there. Hudson Pacific HPP joins City Office REIT CIO and Vornado VNO in trimming its dividend. 40-50% for HPP. 50% for CIO.

    I found two MarketWatch articles both published on May 10. One warned against banks with office real estate; the other, advocated buying banks because real estate was transient and nothing to worry about. One of the banks on the MW watch list was also on a bargain buy list in Barrons. Quite a diversity of opinion out there.

    Of interest is valuation. Big office buildings don’t sell often. So nobody’s quite sure what offices are worth these days. (Except appraisers for developers, LOL.) The Wall Street Journal ran a excellent article in April on an almost-empty, up-for-sale office building in San Francisco. It turns out that the property, 350 California Street, just sold for 75% off, which sounds like the after-Christmas pricing of puffer vests on the JCPenney clearance rack. The WSJ was so deep in socio-economics that it glossed over the real problem: No tenants, no cash flow.

    “What Are Older Office Towers Worth? Here’s the First Sale in San Francisco’s New Era of Office CRE. Union Bank made a deal to sell its tower at 75% off original listing price, setting the first new benchmark. Other towers waiting in the wings.”

    Sentiment: still exiting office REITs. Just my opinion. DYODD.

    1. Added a bit myself. Apparently, the WSJ published a negative article on the sector that caused the downdraft.

  6. An interesting comment from the CEO in the Boston Properties (BXP) conference call.

    “.. work in the office is really about three days per week across our markets .. We are aware of isolated instances where an organization has required all their employees to work .. most of the week, .. but that’s just not the norm.”

    “The deceleration in leasing .. is driven primarily by the economic slowdown, a cyclical trend, rather than remote work, a secular trend .. With slowing growth, companies are more focused on cost control, reducing headcount, and taking less or reducing their space.”

    1. I started a toe hold in Piedmont Office Realty Trust (PDM) today. They own class A rated office buildings in growing areas of the Sunbelt. Their shares have been beaten to a pulp by the market. Hopefully, the flurry of fists landing body blows is nearing the end. But I am prepared to average down if the beat down continues. Buying class A office building near a 50% discount to net book value- what could go wrong? Obviously…plenty.

      1. MarkS

        Always good to buy good quality in the downturns.

        I’ve been using the downturn to begin new positions in ARE and FRT.

        – ARE is tossed in with the office REITs and should not be.
        – FRT is local to me and seems very well diversified outfit.

        I am also looking to add to a small position in ALX (which is kinda’ speculative).

        1. I am looking to add to my ARE position around $115- and looking at FRT as well. ALX is a new name for me. Thanks, Greg. I’ll check it out this weekend.

    1. Why do you think its bonkers? AR Global is not high on my favorites list.

      The only thing I found odd is that if you look back to ~12/22, the Blackwells folks disclosed that they owned very little RTL stock. If their complaint is that their stock is around 40% undervalued, I would pay them their ~$380 and send them on their way. But the lawyers might groan: a contingency fee on that settlement barely covers a decent steak dinner.

      (Not taking AR’s side, just saying, that between the Scylla and Charybdis* of external managers and class action lawyers, it’s hard for the average investor to pick a noble side to root for. ) *”Scylla and Charybdis, in Greek mythology, two immortal and irresistible monsters who beset the narrow waters traversed by the hero Odysseus.”
      “In accordance with Rule 14a-12(a)(1)(i) under the Securities Exchange Act of 1934, as amended, the participants in the proxy solicitation of RTL’s stockholders are: Blackwells Onshore I LLC, Blackwells Capital LLC, Jason Aintabi, Related Fund Management, LLC, Richard O’Toole and James L. Lozier. As of the date hereof, Blackwells Onshore I LLC owns 100 shares of common stock, $0.01 par value per share of RTL (“RTL Common Stock”) and Mr. Aintabi beneficially owns 100 shares of RTL Common Stock. As of the date hereof, Blackwells Capital LLC, Related Fund Management, LLC, Mr. Lozier and Mr. O’Toole do not own any shares of RTL Common Stock. The RTL Participants own an aggregate of 100 shares of RTL Common Stock.”

      Just my opinion. DYODD.

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