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.
Knowledge is Power
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.
421 thoughts on “REIT Chat”
Interesting editorial in the Washington Post on conversions of office buildings to residential properties.
I think this is a growing market for RE developers. It’s interesting to me that the landmark buildings (built before air conditioning) make the most economic sense.
I’ve gifted the article so there is no pay wall.
VNO-M the 5.25% coupon preferred down 6%+ all of a sudden. Is there any adverse news or a big holder trying to exit it?
at $16 it is 8.2% yield ! Opportunity or early warning ?
Continual drop in earnings, continual drop in earnings estimates, 23 percent drop in common stock in the last month, invests in office space, big drop in dividends, drop in book value … what is not to like? Will probably be in R. Moron’s next article. The more it drops the more I tell my blind sheep to buy. His followers doesn’t know enough to pound sand down a rat hole.
Pimco’s Columba trust has defaulted on 1.7B on 7 properties across the country. Brookfield defauted on 750m on 2 office buildings in LA
Trump properties and Vornado defaulted on 1.2B loan on an office complex in San Francisco
This is going to rock all the REIT’s and some babies are going to get thrown out with the bath water.
Remember several REIT’s in Nov. put limits on withdrawals? This is going to be similar to a run on the banks as people try to get out
IMHO, pretty much the same issues as before, with some new wrinkles. Office buildings are still out of favor. Larger investors are cashing out of private REITst, hoping to catch the top and reinvest proceeds elsewhere. (Or just doing normal asset re-allocation, whichever story you want to believe.)
“Blackstone blocked investor withdrawals from $71 billion REIT in February” (Reuters via Yahoo)
New wrinkle: casual mention on Bloomberg Radio that some private apartment REITs are now blocking cash-outs. (possibly Blackstone.) No follow-up or confirmation on this, may just be a stray comment. If so, a surprise. Apartments are a super hot investment. However, a slowdown would be consistent with recent reports on the Realtor website of rents dropping in 9/50 metros due to tapped-out consumers and an influx of new build apartments coming in.
Just my opinion.
See below link for a fantastic article on a hedge fund manager that has been shorting Blackstone (BX). He put up a monster return in 2022 (up 70%) and continues to press the bet:
“A veteran of the private equity world himself, Koppikar thinks more bad news is ahead for the asset class. He’s shorting private equity’s publicly traded asset managers, which he thinks will be among the biggest losers in what he foresees as a coming recession — one that will be different from 2008 because private equity credit funds, not the banks, are now holding the riskiest credits.”
Bear, even my wife who knows nothing about real estate has commented about all the apt. buildings going up in our county. She does wonder where all the water is going to come from with the drought restrictions we had the last couple years although we have had some good rains.
I look at it from where are they going to get all the renters from?
A few questions on tax treatment of REITs to those more knowledgeable than me.
Is there any way to tell before hand the dividend treatment each year or do you just have to speculate and rely on past years information?
If buying in a regular taxed account, ordinary dividend income would qualify for Section 199A, therefore making it a 20% rate. I think there is some sort of phase out for this but I’m sure I don’t come near that.
Return of Capital lowers cost basis, meaning I don’t pay taxes until issue is called or my basis is 0.
Capital gains depends on whether long or short term specified.
Are there any other distribution types I’m missing?
Please correct me if wrong with these assumptions as I have no formal education on these matters.
Thank you in advance for the info. I truly appreciate this site and all the contributors here.
NAREIT has some general and historical information.
Taxes & REIT Investments
Industry-wide Splits between OI, ROC, LTCG, 1995-2020
I don’t think Section 199A makes REIT income taxable at a 20% rate. Section 199A allows a deduction of 20% of ordinary-income type REIT dividends from the total amount you receive. As I understand it, the remaining 80% is taxable at your ordinary tax rate, whatever that rate may be.
I don’ know how one would project a capital gain before it happens, other than keeping an eye on company news. On the other hand if a REIT has previously generated Qualified Dividend Income because it has passed through dividend from a taxpaying non-REIT subsidiary that it owns, it is possible that that event could repeat, so prior year’s taxes may be instructive. When in doubt, send an e-mail to Investor Relations.
Just my opinion. I know nothing about taxes. DYODD.
Quick note on today’s cliff hanger, the heavily shorted meme stock, Bed Bath Beyond. After hours report: BBBY successfully completed its $1+ billion convertible preferred offering, probably averting bankruptcy. By the numbers —
BBB – 769
Baby – 135
Harmon / FV – 21
other – ??
As of September, 150 were slated to close. As of today, “some stores” are expected to close. Given that it expects to operate only 480 stores, “some” could be a large number.
Biggest REIT exposure, as a percent of rent 2.0 to 2.7%
Acadia, RPT, SITE, Urstadt
Biggest REIT exposure, by number of leases,12+
Kimco Realty Corp- 32
Kite Realty Group Trust – 23
Brixmor Property Group Inc. – 22
SITE Centers Corp. – 21
RPT Realty – 12
Citigroup in Barrons cheerfully suggests that, even in the event of a bankruptcy, landlords have this well in hand and will be filling those empty spaces at higher rents. They are suggesting a REIT buying op. I think Citigroup needs to visit a mall or two. I am seeing empty spaces even in the best malls, less demand for brick-and-mortar stores and fewer big box retailers to rent them. And maybe a recession on the way. Just my opinion, though.
REIT data, Sept 2022; store counts, April 2022 both from S&P, DYODD
A local news outlet has reported that several Regal Cinemas in my area are closing. Their corporate parent has filed for bankruptcy.
About 10 REITs have between 2 to 10 of the Regal units as tenants, according to a dubious website that popped up on Google. Simon has about 10 units.
Most of the other REITs are what I’d call second tier so the filing may hurt them more. The touts and pumpers are saying that the dark theaters will be taken at higher rentals, but I don’t know how realistic that is. DYODD.
I don’t follow EPR Properties. EPR apparently has lot of theater tenants, 173 properties / 41% rent / 19 operators. It has a picture of a Regal Cinema on its webpage so it may have some exposure. A quick count seems to show maybe 50+ Regal locations, which could be a big hit. DYODD.
I think OLP has a few, they warned on it but not significant to their total FFO. The real problem comes in where they are important to the theme of related properties or the strip. I believe EPR said the ones they are exposed to were seeing rents paid ..that does not mean a lease renegotiation. I mean where would they get a replacement tenant for an empty cinema these days! I have a small position in OLP around $22 basis. Bea
Regal is dumping some leases, presumably bad. (There is an exhibit to the bankruptcy court filing out there, with a short list of leases to be rejected. It is accessible on AXIOS.) Any marginal leases that Regal decides to retain are fair game for asking the landlord for a rent reduction. Profitable locations are a dicey negotiation for both parties.
Re: OLP. The definition of a Sleep Well at Night stock is one that you forgot that you owned until somebody mentions the ticker symbol on a message board.
Bea, a likely candidate would be some churches. I have witnessed that.
“Groundhog Day” the comedy where every day repeats. Groundhog Day came early this year. I woke up and found myself staring at headlines I thought I read last month. From the malls, “Nordstrom slashes outlook as holiday sales drop”
From REIT land: “KKR, Starwood limit withdrawal requests from real-estate funds as investors try to cash in ….KKR and Starwood fund rules cap quarterly redemptions to limit withdrawals from real-estate funds,”
There was a post here on withdrawal caps over a month ago. They continue. Maybe accelerate. Stanwood hit its 5% max withdrawal limits two months in a row. It honored 63% of withdrawal requests in November, but only 20% of requests in December. A run on the bank? KKR met 62% before it hit its 5$ quarterly cap. KKR owns some floaters.
Can’t say what this means. Maybe a panic. Or maybe cashing out gains to buy end of the year tax loss bargains. Just my opinion.
Bear people postulated a month ago that the redemptions would continue this month and probably next month because of the pent up demand from people wanting out. Its fine with me if these private equity REIT’s bring down the REIT market. Allows you and me to pickup the babies getting thrown out with the bathwater like the grocery anchored REIT’s
Charles, I wish the private REITS would allow full redemptions as it would lower their underlying assets tremendously. Are you aware of any fund that is focused only on grocery-anchored? TIA
PetoskyMI, you might be interested in Kimco Realty® (NYSE:KIM): a real estate investment trust (REIT) headquartered in Jericho, N.Y. that is North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers, including mixed-use assets. The company’s portfolio is primarily concentrated in the first-ring suburbs of the top major metropolitan markets, including those in high-barrier-to-entry coastal markets and rapidly expanding Sun Belt cities, with a tenant mix focused on essential, necessity-based goods and services that drive multiple shopping trips per week. I sold 3 Publix shopping centers I owned in Florida years ago to Kimco and they were incredible to do business with. This is NOT a recommendation, just a thought for anyone to do their own deep due diligence in…
Wishing you profitable investing, A
shhh AB I’m still trying to buy more of the preferred.
UBP. Common has a little over 5% dividend, regional grocery anchored REIT, mainly NY and NJ. I’m in the preferreds.
Well, let’s not forget the solidist of most solid, most trustworthy, most financially sound of all the grocery-anchored center REITs, WHLR along with their CDR related preferreds. Haha… AB would say do your own due diligence… I would say don’t even bother, run for the hills…. Such a soap opera going on there at WHLRD…… Whew….. It takes a pure risk taker to even consider stepping into any of those vehicles..
Urstadt Biddle is a well respected company. They are about 15% super-regional grocery chains, like Acme, Stop and Shop and Shop-Rite. About 3 BBBY stores out of ~77 properties. No mortgages due until 2024. A bit more equity and a bit less debt than their peers. One plus is their concentration in the tri-state Metro Area outside NYC. There’s not much land available and what there is, is expensive. Any competitor would face angry neighbors at the zoning hearing. The competitive risk is WalMart / Target rather than other grocers.
Disregard the preceding paragraph. I bought their preferred because I worked on the other side of the table from their senior management team some years ago and came away impressed that they knew what they were doing. Solid, capable and unexciting. I was looking to infill with a SWAN position, not another crash-and-burn screamer recommended by The Buy, Buy Big REIT Guy on The Other Website. We’ll see how this works out.
Just my opinion.
Any opinion on NXDT. Converted to a REIT from a closed-end fund. Sells at quite a discount to book value.
There is quite a lot of discussion here on NXDT if you put the symbol in the regular search box ( not the ticker box) including some recent, both pro and con; certainly more speculative; the interlink of debt between subsidiaries is a concern to some as well as the history of mgmt..
personally, I feel things are under control and I am long a small amount of pfd at 15.50 and small amt of common at 11 in a very diversified r/e, reit/reit pfd portfolio. I am long a lot of r/e now fwiw. Bea
Barron’s had a short note on two REITs possibly affected by the Bed Bath and Beyond bankruptcy.: Acadia Realty Trust (AKR) and Kite Realty Group Trust (KRG) both well under 3% of rent. Mitigating factor: BBBY was tottering for a while, so it was no surprise to anyone.
Party City is also on the edge. Your chance to buy up the 8.75s of 2026 for 31.8, helium not included. No word on landlord impacts yet.
I expect the REIT pumpers on TOW to start publishing articles saying, wow, that’s great, now the landlord can lease up at higher rents. Not exactly true, since fewer ### retail chains mean fewer ### store fronts needed.
My little local Kohl’s-anchored strip mall had a Modells Sporting Goods, a Tuesday Morning, a shoe store and a Party City. They are all closed now and Kohl’s just moved across the street, No matter how much you like Kohl’s, you don’t need two of them 600 feet apart. So Panera Bread now has a lot of parking and the landlord has a cash flow problem.
Just my opinion.
On top of that say if a nail salon or some other small business wants some space from that strip mall the owner hits them with a triple net lease, maintenance fees like plowing if required, and god knows what else they want to tack on making their all in price per square foot obnoxiously high. They think everyone should pay like a home depot or franchised chain. So it just sits.
And then if you are interested in buying and you see it listed it is often an obnoxious sum of money with no leases bringing in cash. They think it is a gold mine or something as the whole building ages, parking lot needs work, and there are multiple other plazas on the road with vacancies.
It’s hard to ask for a high price on an investment property when its mostly vacant. The opposite is better. I worked for a young real estate guy years ago. He got to be big and famous. One night we ended up at a late night closing with nothing to do. We were buying a big complex from an S&L out of foreclosure, maybe 250 units, pretty beaten up.. So I chatted with his acquisitions VP for a while.
He started out in college. He’d buy up high vacancy, down-at-the-heels apartment buildings in smaller college towns, do minimal fix up, tenant them up with students to build up a fat rent roll, then flip them to an investor for a handsome profit. (Of course the students left after the semester was over.) Lather rinse and repeat.
As the real estate market started booming and he got bigger, the pace picked up. Sometimes we’d buy a foreclosure and like 20 minutes later, we had it repackaged and sold to investors. And then Paul Volcker happened.
A look back at some REIT stats for the year 2022:
S&P 500 – down 20%
Real Estate Sector ETF XLRE -down 29%
Equity REITs – down 28%
Mortgage REITs – down 35%
REIT sub-sectors with larger than average losses (over 28%): Office, Residential, Infrastructure, Industrial, Data Centers, Self storage
REIT sub-sectors with smallest losses (~20% or less): Specialty, Lodging, Retail, Diversified, Timber
Green shoots. Some REIT sub-sectors jumped at least 10% in 4Q22: Specialty, Retail, Data Centers and Diversified.
I was surprised that, other than Offices, the sub-sectors with the biggest losses were the darlings of the REIT experts. On the other hand, the sub-sectors with the smallest losses seemed to be the most hated ones.
I was also surprised at the strong pops in 4Q22. Retail, up 16%? Timber, up 8%? Didn’t somebody tell them about the recession? Maybe there is hope.
Source: NAREIT & S&P data charted by The Other Website.
Bear, I wished someone would remind the investing public that REIT’s are out of favor. Keep waiting for my low ball bids to hit in the retail sector.
Timber, wait for the other shoe to drop. see too many comments on SA by retail investors thinking that the timber REIT’s pay fixed dividends. I could be wrong but I want to see 4th quarter and 1st qtr of this year.
I started adding retail in December, my first add there in a long time. Timber REITs pay 4 regulars plus extras that vary widely. So, IMHO, there’s no need to rush. The extras may be down this year. Lumber prices spiked up and down in 2021 and 2022. Lumber was down ~67% in 2022 point-to-point.
Bear, which ones in retail have you been looking at? Timber I have followed for decades but outside my own company’s stock never pulled the trigger.
Still too early I think for timber
I think it is too early for timber as well but I did put Acadian Timber back on my watch list; have traded it well thru the years, lastly selling at US$15 or so when the FED started hiking. OTC $ACAZF or TO: ADN. It had been controlled for years by Brookfield but they got out and Macer Forest Holdings bot their 45%; Malcolm Cockwell on the board controls that. Like all Brookfield co’s it was a little debt heavy but they have done pretty well since the sale. It pays a high div barely covered but they have a DRIP plan and Malcolm puts 50% of his cash div into stock ea quarter in the DRIP; so effectively reducing the cash payout required quarterly. Pays .29C/q.
A small company w decent yield, no guarantee they don’t cut the rate. Biomass is doing better w prices up and exports to EU up; they also do carbon capture a new source of revenue. Not your typical log company for sure. DYODD ; this could have gone in the CA discussion section but since you were asking about timber, put it as a comment here. Not a REIT, a corp.
Bea, thank you for your post. I use to trade AcadianTimber (ACAZF) all the time and they have a great track record of dividends and excellent management https://www.acadiantimber.com/dividends.html
The issue is that the price of timber (soft and hard woods) have collapsed because of the slowing of the housing market/Fed’s agressive raising of rates have destroyed new housing starts in Canada and the US. Lumber was down negative -66.45% in 2022 OUCH! I own a bit over 2000 acres now after the 150 acre parcel I just bought in Kentucky and did most of my cutting in early 2021 when (thankfully) prices were much higher. I am looking to add to my land holdings and hope that land owners are willing to sell on the elcheapo in 2023.
The best investment on Earth, is Earth 🌎
Charles and Bea:
Blackstone says why bother with the REITs down 30%? Their super special/immune/cloaked in armor BREIT fund was up 8.4% in 2022 (through 11/30/22):
“Last year through November, returns totaled 8.4% for a popular BREIT share class. Blackstone has attributed BREIT’s outperformance to its focus on residential and industrial properties in markets where limited supplies support steady rent increases and high cash flow. BREIT’s net asset value is $68 billion, while its total asset value is about $126 billion.”
If anyone believes the marks BX is putting on that BREIT portfolio, then I have some beach front property I can sell you in Nebraska.
Obviously many don’t, as they continue to try and pull their cash out at NAV every quarter. If I had cash in BREIT and could get it out at their fantasy NAV, I would definitely be placing some of it in publicly traded REITs.
There was a quip from a Bloomberg Radio commentator last year that went something like, “Just because an asset isn’t priced every day, it doesn’t mean that it doesn’t go down in value.” I tend to prefer liquidity and open pricing.
As far as BX’s comment about “limited supplies supporting steady rent increases,” there may some merit to that at least as to residential. Starwood got some bad press on its big apartment rent increases just yesterday, defended as its “legal responsibility to reward investors. ” Don’t know if those increases helped. Like BX, Starwood’s non-traded REIT also limited withdrawals, It was only able to meet ~63% of withdrawal requests in November, according to Barrons.
Starwood, Like Blackstone, Limits Investor Redemptions From Big Real Estate Fund
Just my opinion.
the BX pres was on this AM and they got a $4bil check to invest in BREIT via a Univ of Calif. .. essentially it is a guaranteed 6yr ‘preferred’ paying them 11.75%..here is more to read about on it..gives them ‘liquidity’ and possible money to take advantage of opportunities. I never owned or liked private reits and will take my chances w the public ones I own now. BlackstoneBlackhole..no thanx. https://therealdeal.com/2023/01/03/the-university-of-california-boosts-blackstone-reit-with-4b-investment/
Looking for a stock that can go from $2 to $16 in two weeks? Look no further than New York City REIT (NYC. )
It is doing a 1-8 reverse stock split, changing to a C-corp and will be buying new types of stuff ( a/k/a “Business Strategy Change”). NYC, which specialized in offices in The City, expects to benefit “from portfolio diversification and new revenue opportunities” and to “generate greater growth and profitability by evolving business strategy.”
NYC’s rational is to “Offset Prolonged New York City Office Rebound.” Which sounds somewhat contrary to the cheery “offices are back” stories I keep reading. Like in their November 14 earnings release: “Momentum continues to build in Manhattan…” LOL.
According to Real Estate Weekly, NYC only started stock exchange trading August 18, 2020. That was during the pandemic and lock / unlock downs. From the CEO – “We are highly confident in the long-term outlook for real estate in Manhattan…” The stock has dropped ~85% since then. (From The Mamas and The Papas – “Nothing’s quite as sure as change” , 1967.)
New York City REIT is externally managed by AR Global, along with Global Net Lease GNL and Necessity Retail REIT RTL. Google around.
Disclosures: No position in NYC. Amending and updating my New Year’s Resolution: “Avoid most externally managed REITS.”
Just my opinion.
A well liked writer, CWM over on the other site warned in Oct. GNL preferred are a sucker trap.
GE spinoff, GE Health Care Technologies, GEHC, is bumping Vornado Realty Trust, VNO, out of the S&P 500. This is a wash sale by SnP since VNO drops into the SnP Mid-Cap 400.
VNO, a 10% yielder, telegraphed a dividend “right-sizing” during a recent conference call. (That means “cut” in CEO language) Local NYC competitor SLG already cut its divvy.
Vornado, off 52%, year to date
SL Green, SLG, off 57% YTD
SnP 500, off 21%
SnP 500 Real Estate sector, off 28%
SnP 500 Healthcare sector, off 4%
Fun fact: Four months ago, VNO was touted as a “double your money in 3 yrs” speculative buy (30%/yr x 3 yrs) with a “well-covered dividend” on The Other Website. Price decline since recommendation: 21%.
Fun fact 2: The big media, city planners and think tanks are touting the conversion of big city office buildings into luxury apartments. With office vacancies and re-fi rates both up, I expect to see some stock pumping articles on the usual tout websites. You are warned.
VNO has some discounted preferreds available, which is another way to go. Even though a VNO cut is well-advertised, there’s always someone who didn’t get the memo.
Just my opinion.
SubSector by SubSector performance of equity REITSs: a bar chart, for those who like to do year end bench marking. Offices were a loser, otherwise a lot of surprises for me. Hotels, shopping centers and timber outperformed apartment, multifamilty and single family home REITs.
Predictions are for more losses, but who knows. More importantly a lot of real estate debt rolls over at higher rates in 2023.
“Office-property woes are driving REIT carnage as 2022 shapes up to be second-worst year on record”
Just my opinion.
Local radio station KCBS said last week downtown San Francisco has only seen about 1/3rd of the workers coming back. FWIW the radio station offices look down on the streets and they can see the volume of traffic moving around. San Francisco also announced due to tax revenue falling they will have a budget deficit of 728 million over the next 2 years.
The same radio station had a story on independent book stores for the holiday shopping season. They did an interview with the owner of Powell’s bookstore in Portland and her assessment was sales and foot traffic still haven’t recovered in the 2yrs since Covid started and she didn’t think it ever will reach that level again because of people switching to buying on the internet. As a matter of fact, Powell’s internet sales are up.
I’d look for more dividend cuts in the office REIT sector. SLG got the party started recently with a 13% dividend cut, followed by DEI with a massive 32% cut.
VNO, BXP, HPP, etc. could all follow soon. The office REIT sector (via common stock) still looks un-investable at this point. Most of the preferreds also have been whacked.
These companies are just spending too much money on tenant improvements to keep their tenants as the leases roll over. Add to that falling occupancies. Just a mess.
Great article by Trapping Value (all his articles are very good) on SA regarding HPP:
No illusions there. Of course I have been eyeing the common stock of one of the companies you mention. Tempted to start a position, but leery for all the reasons you mention.
I know you sold your house in Vegas, but you probably know that area quite well. Same for me when it comes to the bay area.
Industrial REIT’s might be a better way to go. Especially with bigger cities.
Key to a decision is ask yourself where are the international ports and major highways and rail transport.
No one is building new ports, Highways or Rail lines.
Thanks Rob ,
Couldn’t agree more with you , Grid and Bob In De.
Actually been watching HPP-C since it was brought to my attention.
Why lock up money in a 4-3/4% preferred even if its getting you about 9% ?
Everyone has their reasons
FWIW , PG &E got final approval to sell its 6 corporate office buildings in downtown San Francisco to a private developer out of Tx. Same company who built the sales force tower. 800 million goes a long way to supporting PCE preferred stock. On top of that they asked for a 8.00 a month rate increase from the state!
BTY, all the good office REIT’s are privately owned and don’t have to answer to investors. Irvine , Hale, Sunset Development to name a few.
Adding to the trend of increasing share of retail online sales is the trend to move to digital books. One soft data point: purchases of digital book licenses by Seattle Public Library are way up the past couple of years relative to purchases of physical books.
I am a book lover (and btw a former typesetter) with waaay too many books in our house, so I stopped buying books several years ago, instead always borrowing at the library the books I read. Now when I want to borrow a more recently-published book: a) there almost always is a digital version available to borrow, and b) if there also is a physical book available, it will have far fewer holds on it than the digital version.
What is your Lead level Bur? !
We have had over the years people wanting to sell us the type set for recycling. Last unfortunate guy had stored some old antique printers that were destroyed in the Napa earthquake. Wanted to sell the type since he had no use for it anymore.
lol lead level? I was setting type on photo- and then digital typesetting machines. Did that 1980-1990 in both Portland, OR and the Bay Area. Fortunately never had to set lead type for a living. I did, however, work for several years in the same space with an old codger running a Linotype machine, so I might have have a bit of lead in the system. Hmmm, now you got me wondering…
Yes it’s sad (for me anyway) to hear about folks shutting down old handsetting presses, but whattaya gonna do?
“I avoid most externally managed REITs” — tidbit found on The Other Website.
By way of disclosure to the group — I will be making that one of my New Year’s Resolutions for 2023. We’ll see how long that lasts.
“Experience is a hard teacher because she gives the test first and the lesson afterward.” – Vernon Law
The WSJ had a big article today about commercial REITS limiting withdrawals due to large customers crowding the exits: “Investors Yank Money From Commercial-Property Funds, Pressuring Real-Estate Values”
Here’s the lede:
“Big and small investors are queuing up to pull money out of real-estate funds, the latest sign that the surge in interest rates is threatening to upend the commercial-property sector.
“Blackstone Inc. last week said it would limit the amount of money investors could withdraw from its $69 billion flagship real-estate fund following a surge in redemption requests. Starwood Capital Group shortly after notified investors that it was also restricting withdrawals in a $14.6 billion fund, according to a person familiar with the matter.”
There’s a calming quote from the WSJ article posted on Reddit mentioning a state pension fund that looks to be selling off ~20-25% of its real estate portfolio. I took it to say, “sure we’re selling, but don’t you worry, we’re only rebalancing our portfolio because real estate is way up and stocks and bonds are way down.”
While I don’t necessarily foresee a commercial real estate collapse, I do remember a song lyric that went “your eyes have a mist from the smoke of a distant fire.”
Disclosure: Looking to add at distressed prices in 2023.
Just my opinion.
“Disclosure: Looking to add at distressed prices in 2023.”
yup. this is isn’t over yet.
Bear, one of my bids that was just sitting there hit today. I picked up a small amount of TFSA at 22.85 BB due 2026 also get the divy coming up in a few weeks. If it goes lower will probably add more
…… Holy crap…
The deal will give BREIT a longer-term source of capital and, in exchange, ensures that the University of California nabs a minimum annualized net return of 11.25% over the six-year holding
Justin, Taking a step back, this transaction appears a de facto hard money loan.
While providing redemption liquidity, a whopping 11.25% minimum annualized return will surely reduce yields to existing investors not members of the insiders club. This has a 2008 feel to it.
I’ll bet you a beer no one in Blackstone will see any difference in their paystubs. Heck might even be a bonus in there.
A shareholder should submit a proposal to rename the retail share class to the “bagholder class”…
Some of the MREITS concentrate on Mortgage Servicing Rights (MSR). Ginnie Mae announced new rules last week that impact their worth. Some analysts are forecasting this will cause an instantaneous 20% loss in value for them. If you hold the common and/or preferreds from the affected MREITS, you might want to take a look.
Thanks very much for that. It explains the recent drop I saw in mREIT prices. Beyond my pay grade to explain the issue, but the hot-button language in the PDF seems to be:
“While all assets are given the same weight in the existing Leverage Ratio, the RBCR (risk based capital ratio) will risk weight assets according to the following schedule:
250% _____ Gross MSRs (not to exceed Adjusted Net Worth)”
Fine up to there, but the increased MSR capital requirement applies only to non-federally regulated banks, i.e. things like mREITS. Industry complaints are discrimination against non-banks, many of which are pass-throughs; big increases in capital (+37%); and servicers leaving the market reducing mortgage availability to first-time buyers (Housing Wire) .
Ginnie Mae says, Not to Worry, 95% of its servicers will be in compliance with its new rules. But I will bet you that the 95% includes regulated banks, which are “in compliance” but don’t need to post added capital.
Just my opinion.
REITs crashing in anticipation of dividend cuts. REIT preferreds also crashing but not for the same reason, dividends can’t be cut only suspended which often precedes bankruptcy. So are these issues screaming bargains? Or are we headed for a wave of bankruptcies?
High risk MITT priced like it’s among the first to go but moderate risks such as RITM TWO and NYMT preferreds are above 10%. Can’t justify that by rate hikes alone. AGNC and NLY were always considered among the lower risk and they’re staring at over 9% with the floating rates.
I assume based on your post you are only referring to Mreits.
There is a pretty good recent article by CWMF discussing this
This quote in particular is one to remember:
“Of course, there also will be a few people who yell that the sector is dead and will always be dead. If you need any comfort, go look at articles and news pieces posted from 3/27/2020 through 4/04/2020. You’ll see an abundance of “investors” claiming everything was going to $0. Not even one of them went to $0. Not even one. For preferred shares, almost all of the mortgage REIT preferred shares traded above $25.00 at some point in 2021. Don’t pay attention to investors who don’t know how the sector works.
Not to be entirely fair, that also includes investors who claim that they’re buying the common share for the dividend and don’t care about the price. Don’t pay attention to them either. Prices trend lower over long periods because that’s what happens in a sector that almost always has double-digit yields. That’s how things work. However, when prices get too low, they also spike dramatically higher while paying out a huge dividend. For investors willing to get in and out, it’s an exceptional opportunity. For investors looking for yield, the decline in the preferred shares is dramatically overdone. Many of those should recover to trade at least close to $25 within the next few years.”
I myself NEVER touch the common stock of a Mreit. I do however have my fair share of Mreit preferreds. I am in the CWMF camp that the decline in the preferred shares is overdone and thus presents a good opportunity for those with a time horizon of a couple of years
I’m heavy into them so it’s a concern. I’m more of a numbers guy than an analyst so mostly I read reliable analysts, CWFM is one of the best. Been adding some on each drop but mostly trading between them on inconsistent price movement as always. Stacking nickels while losing quarters in price drops. If they survive the storm at any price I’m doing fine.
I hear you. I have more mReit preferreds than I should. I try to stick to the stronger ones – NLY, AGNC, DX but I do have a small amount of some others.
Mav, How have they performed for you? I read about them, but I have rarely went there, though I find them fascinating because of their volatility. I know everyone says the concept is simple, and I totally get that part. Its the nuts and bolts and what is really going on under the table I know nothing about.
I certainly respect CWM understanding of the sector but he gets blindsided too with the best of them as the market can be cruel to them at times. I guess I am too old to ride a roller coaster, but I find them fascinating to read because there is always a new surprise waiting it seems.
Grid – well I guess it depends on how you look at it in answering how mreits have performed for me. As you note, they can be a roller coaster. I only buy mreit preferreds, never the common. And I buy them for the income stream – and in that regard they have delivered what I expected. However if I had to sell them now, or mark to market them today, overall I would be somewhat underwater in terms of their purchase price given the dip this year. It’s part of the territory with them. Now if I add in the dividends they have paid me over time my overall return would be positive
I should note that I typically do not buy them to trade (other than to perhaps swap between issues). They are usually longer term holds although certain circumstances can provide exceptions. So i don’t get bent out of shape on price fluctuations like now.
They were up pre-covid, crashed significantly in the covid panic (one of the few times I added more to trade short term), went back up and now down. I guess I take comfort in the fact that during the depths of the covid panic, only a couple of the very weakest ones (only one of which I owned then) ran into issues / suspended dividends (and that is because the whole MBS market was locked up).
I will note that after the Covid recovery, I really did not add any more (save for swapping between issues ) until recently the past 30 days or so. Typical buy when everyone hates them, not when everyone likes them 🙂
Not sure if that answers your question or not
Yes, sir, thanks, Mav.
Mav – with you on these cash-flow machines. Since the 2008 reset, agency (FNMA/FHLMC) paper has been underwritten with the most stringent underwriting guidelines ever. The underlying asset is rock solid so it really falls to rate-hedging.
Sticking with the gold-stars in the AGNC(x) group and yes, buying opportunistically with you during the selling episodes.
Any thoughts on select Mreit preferrds here? They have been crushed
RC has a few different ones
Sam – In times like these Mreit preferreds usually move in the same direction. A number of people stay away from them and when sentiment turns negative they don’t look pretty.
That said, I have always owned some Mreit preferreds and do now. And as long as one has a long term perspective I think you can do well with them. During the covid crash only the handful of weakest Mreit preferreds had issues with dividend payment. Generally the 3 strongest (which only own agency debt) are
RC and PMT are a bit different in they have a mortgage servicing component too
As to what is a buy here, it really depends on one’s risk tolerance, timeframe, etc. Whether you buy a fixed rate way under par or a FTF rate depends on your outlook.
The two that I have added in the past several months is AGNCL (admittedly I bought my first couple buys too early when it first came out but it is now yielding 9.65% and doesn’t float for 5 years) and NLY-F which just started floating a few days ago and is paying a coupon the next 3 months of 8.66% while trading at 23.97 – so a yield a bit over 9%. The fact that NLY-F can be called will keep the price up more than the others (same thing with AGNCN which floats starting 10/15 at likely an even juicier rate). I added AGNCL to lock in that high rate for longer and added NLY-F because the share price will be a bit more protected given it can be called
But everyone should do their own research on these and other mreits. I also suggest following CWMF on SA as he does a very good job covering this sector
For anyone that is new or “newer” to REIT preferred stocks, I would highly recommend reading a book called Cash is King – Investing in REIT Preferreds to Generate Long-Term Income by Simon Wadsworth. He was the long-term CFO of MAA and has a lot of experience in the area. I believe the book is out of print, but noticed this week there are a number of used copies for sale on Amazon for around $10 each.
Any comments on use of the service Groundfloor (groundfloor.us) as an alternative to REIT investing? Groundfloor provides a service to directly participate in real estate loans.
The greater fool might not show up with higher mortgage rates on the horizon.
Something to consider as mortgage rates increase and high construction costs exist. How quickly will new construction be sold as rates increase. I’m surprised there are several large construction projects of townhouses, condos and apartments going on simultaneously in my area. It will be interesting to see how quickly they will sell. Also house flippers are still active in the area.
It’s a different type of investment. I’ll stick to what I know and have had success at.
Another blow-up on a REIT buy recommendation for the high-yield touts on Seeking Alpha that “shall not be named”.
ONL falls 15% the day after it was recommended by them on SA. Good God.
Another blow-up on a REIT buy recommendation for the high-yield touts on Seeking Alpha that “shall not be named”.
LOL I just spit my coffee out. Thanks for the laugh but now I need to clean my keyboard!
What’s next for downtown Chicago? Fewer people work in offices, some major retailers have closed their doors
What’s next for downtown Chicago? Fewer people work in offices, some major retailers have closed their doors
Freishtat, Sarah; Zumbach, Lauren.Chicago Tribune; Chicago, Ill.
Long associated with gleaming office buildings, retail and throngs of workers and tourists, changes could be in store for downtown Chicago as it works to regain some of the bustle it lost during the COVID-19 pandemic.
Empty offices and closed storefronts have put the vibrancy of downtown Chicago at stake. Almost 18% of downtown office space was vacant at the end of 2021, according to commercial real estate firm CBRE. The closure of major retailers along the Magnificent Mile, such as Macy’s and Gap, left massive holes in the city’s best-known shopping district.
Office use and shopping habits were changing long before the pandemic, but were exacerbated by COVID-19 shutdowns. As the city tries to emerge from the pandemic, downtown faces myriad challenges: a changing office landscape in the Loop, a decline in retail activity along the Magnificent Mile, concerns about crime.
Meeting those challenges could mean changes that reshape the face of downtown, according to real estate experts, researchers and neighborhood groups. Old office buildings could be converted into housing. Michigan Avenue is looking beyond retail to more experiential options. Local businesses might have more chances to expand downtown.
In one sign of that change, Hubbard Street Dance Chicago recently moved into an old Adidas store on the fourth floor of Water Tower Place. Adidas is now located elsewhere in the mall.
Hubbard Street Executive Director David McDermott sees the neighborhood’s boutiques, universities, hospitals, cultural institutions and nearby beach as anchors that will keep it durable.
“I think we’ll continue to see a diversification of tenants along North Michigan Avenue,” he said. “And we’re happy to be kind of at the leading edge of that.”
Getting there will require bringing people downtown. There were upticks in pedestrian traffic before the omicron wave, but with fewer office workers around and amid rising worries about crime, employers, store owners and landlords are eyeing creative options.
A makeover for old offices
Real estate experts and landlords aren’t worried about companies deserting the urban core, but as the need for office space changes, so does the outlook for downtown. Fulton Market, which at one point seemed overbuilt, is now in demand, thanks to its newer, amenity-heavy buildings, said CBRE Vice Chairman Todd Lippman. Dated buildings in the heart of the Loop, however, are struggling.
“I see a lot of pressure on those buildings, and I don’t know that all will come out in good shape,” he said. “I do think there will be repurposing.”
Office vacancy at the end of 2021 in the central business district, which includes the Loop, Fulton Market and River North areas, ticked slightly down for the first time during the pandemic, according to CBRE. More space was available to sublease than in either of the two prior years, but growth in sublease space was slowing, the firm said.
Companies want space in new office buildings with plenty of amenities to entice workers back, such as cafes, entertainment spaces or fitness centers, said Jack O’Brien, principal of Chicago-based real estate services firm The Telos Group. While many renovations were underway before the pandemic, some were adjusted to emphasize outdoor environments. That includes the Old Post Office, where a roof deck got additional seating.
For older, less desirable office buildings, conversions to housing could be a path forward.
That is one option under consideration for a historic office building at 36 W. Randolph St.. With little space to add amenities and working around the building’s landmarked status, a conversion to small apartments, shared living or a hotel would be most efficient, said Steven DeGraff, who is part of the group that owns the building.
The rent the building could generate from an office tenant wouldn’t justify the construction costs of retrofitting it, he said.
“There is a lot of need for housing, and that continues,” DeGraff said. “And location-wise, you’re right in the central business district, (where) you don’t have a tremendous amount of apartments yet. So it’s really the market that dictates that.”
A shift toward housing had started before the pandemic. The share of space in Chicago’s central business district devoted to offices shrank from 79% in 2011 to just under 75% earlier in 2021, while multifamily housing grew from 9% to 16%, according to CoStar data.
Meanwhile, Chicago’s downtown grew faster than any of the country’s other large metro areas between 1980 and 2018, swelling from just over 18,000 residents to more than 110,000, according to a 2020 report by the Brookings Institution.
With new housing comes demand for services for residents, such as day cares, schools and gyms. Those can also serve as new uses for old office buildings, said Tracy Loh, a fellow at the Brookings Institution who co-authored a report on downtowns’ recovery from the pandemic last year.
The conversions come with caveats. Residential buildings are likely to generate less tax revenue than a commercial space would, Loh said. And construction could be challenging — for example, some old buildings lack bathrooms on each floor, said Michael Edwards, president and CEO of the Chicago Loop Alliance.
Still, Edwards sees conversions as one viable option for downtown. The Loop Alliance is championing alternative funding, such as tax credits, to help make them successful.
Opportunities for local shops
As office tenants seek buildings with amenities, landlords have a big incentive to fill retail and restaurant vacancies left by the pandemic, especially when they’re trying to get workers excited about returning, said John Vance, principal at Stone Real Estate.
There were 208 more empty storefronts in the Loop in mid-2021 than in 2019, a Stone Real Estate report found. Restaurants accounted for 44% of the newly empty space, and apparel stores made up 16%.
That could give local businesses an opportunity to expand, just as small businesses expanded in the aftermath of the 2008 financial crisis when big chains were more cautious, said Greg Kirsch, executive managing director and Midwest retail leader for Cushman & Wakefield.
“Money’s cheap, it’s easy to get a loan, and there are entrepreneurs who want to get out there,” he said.
Willis Tower, where about 85% of office space is leased, was already planning to focus on “uniquely Chicago” businesses with a redevelopment that started in 2017 and added 300,000 square feet of retail space, along with other new amenities, said David Moore, senior vice president and portfolio director of building owner EQ Office.
That included national brands such as Shake Shack, Sweetgreen and Starbucks, but also local names such as Rick Bayless’ Tortazo, Lettuce Entertain You’s Sushi-san, Do-Rite Donuts & Chicken and, soon, Kindling, a new restaurant from the Fifty/50 Restaurant Group. Much of the leasing took place pre-pandemic, but interest has remained throughout, he said.
Fifty/50 had been in talks with Willis Tower’s owners about opening a breakfast spot in the skyscraper before the pandemic but conversations stalled until the fall of 2020, when the building owners reached back out with an opportunity for a full-service restaurant with an outdoor terrace, said co-owner Scott Weiner.
Weiner thinks downtown building owners’ interest in local concepts predates the pandemic, pointing to food halls such as Revival, and said he thinks the neighborhood has “amazing opportunities,” even with uncertainty about how the pandemic will affect foot traffic.
“Even when Willis is 20% occupied, it still has more people than most buildings in Chicago, and there’s a weekend crowd,” he said.
Still, landlords and prospective retail or restaurant tenants may need to get creative as long as hybrid and remote work could affect the customer base, Vance said. That could mean basing rents on a percentage of a retailer’s sales instead of a flat rate, he said.
Elsewhere in the Loop, Edwards thinks there is a future for retail that is heavy on the experience for shoppers. That could go hand in hand with a shift toward more residential buildings, because a growing population downtown would mean more residents nearby to patronize different kinds of stores, he said.
“When we all used to work downtown, we’d all stay in our neighborhood because we were tired of going downtown,” Edwards said. “Well, now everyone is in their neighborhood, in their house, around their street, so downtown is becoming much more of a destination on a weekend.”
One damper, though, has been the perception of crime downtown.
In the first three weeks of the year, 600 complaints of crimes including burglaries, motor vehicle thefts and violent crimes were reported in the police districts that include downtown and other surrounding neighborhoods, according to preliminary Chicago police data. That was up from 412 in the first weeks of 2020.
The Loop Alliance has long had safety patrols on State Street during the day and in recent months hired unarmed security to walk the area after 11 p.m. That was partly in response to complaints that restaurants and bars were having a hard time hiring employees who didn’t feel comfortable walking to or from work late at night, Edwards said.
“Downtown cannot be successful until we can restore customer confidence in their experience when they come downtown, it can be predictable” he said. “And right now, it’s not as predictable as we’d like it to be, both on the pandemic side and on the consumer confidence side, feeling safe,” he said.
A few blocks north along Michigan Avenue, addressing crime such as smash-and-grab robberies and carjackings are a key priority for the Magnificent Mile Association, said President and CEO Kimberly Bares. Many retailers in the area have hired private security, she said.
A new special taxing district on properties in the area will send about 70% of the funds raised toward safety and security measures, such as “ambassadors” walking the avenue and surveillance cameras, she said.
The association is also urging tougher prosecution and sentencing for repeat offenders, Bares said.
Changes on the Mag Mile
There were positive signs for North Michigan Avenue in December. Traffic counters in the 400 block recorded more pedestrians than in the same month pre-pandemic, according to the Magnificent Mile Association.
But the high-end retail district is grappling with a shift in how people shop that was exacerbated by the pandemic, and has left large vacancies at the Water Tower Place mall and elsewhere along the street. A panel organized by the Urban Land Institute, working with the city and the Magnificent Mile Association, set out to study solutions for the corridor.
“Shopping and retail has changed,” said Swasti Shah, director of community engagement for ULI Chicago. “It cannot be just relying on big retail brands and flagship stores.”
Among the panel’s recommendations were to create more places for people to gather and a focus on experiences, such as the Dr. Seuss Experience at Water Tower Place or The Office Experience at the Shops at North Bridge. Walkability to tourist destinations such as Navy Pier could be improved. Focusing on local retailers could give people a reason to visit, Shah said.
ULI is also convening a panel to study LaSalle Street in the Loop.
Retail will likely always have some presence on Michigan Avenue, Bares said, but experiences could also be part of the avenue’s future. In addition to pop-ups, including The Office and Dr. Seuss experiences, she pointed to existing stores such as Eataly or the Starbucks Roastery that feature dining.
The Magnificent Mile Association is also looking at more festivals and events, such as the Meet Me On the Mile events in 2021 that closed parts of the street to vehicle traffic.
“In an era where we can buy almost anything we want online, what we can’t buy online is experience,” Bares said. “And to the extent that anyone can match the best product or service with experience, they will be the winner in this new market.”
That shift in focus is in line with Hubbard Street Dance’s recent move to Water Tower.
McDermott said he approached Water Tower’s owner about moving into the space after the dance studio sold its building in 2019. He was drawn to the site after seeing other “experiential” and arts-focused tenants nearby, and to the mall’s accessibility to the public, he said.
“How can we share Hubbard Street with more people, share world-class art with more people?” he said. “I don’t think about it really as a mall. I just think about it as a place to showcase our art.”
There have been some interesting articles on SA recently regarding GEO Group and CoreCivic news and analysis. GEO Group bonds have been a good investment for me both with capital gains and constant dividend payments. I sold CoreCivic but need to reevaluate.
I held both for long time but got out of GEO last year, now Corecivic is one of my larger positions. I liked when they became a C corp to eliminate the forced dividend and based on their cash flow will have no trouble with the debt maturities in coming years. I wouldn’t buy the stock in either but felt more comfortable with the Corecivic bonds.
I tell you, It’s tough out there.
How tough you ask?
Tough enough that I had to be the Bid and Ask on CLDT-A today.
But, I scored. As someone ate up my 26.59 offer.
I am only 20% invested right now.
I Did buy 10k of iBonds last week.
A happy belated New Years to you all.
Newman, one of the stranger issues of the day. After you sold, it traded up to an all time high of 27.10. Why a lodging REIT preferred would trade at an all time high in a Covid world is a mystery to me. . .
I think a ETF or Fund bought the issue at high price points.
On their list, it will appear as 8,000 shares of CLDT-A with a coupon of 6.625%
Anyone who reads that will think, Good Catch!, but, the yield to call is less than 5.5% at 27.00
I have been loading up on PSEC-A recently.
My holdings are
Qrtep, Abr-d, Oxlcm, Psec-a
Ep-c, Nrz-b, Eccx and finally 200 shares of KTBA
Newman – So 20% invested implies you’re 80% in cash losing 7% of purchasing power annually as it stands right now…. What are you doing with what constitutes your 80% uninvested funds???? Are you content to just wait it out for better opportunities??? Not being critical as I too carry high cash reserves, but nowhere near yours, so just wonderin’.
2WR, Been busy.
Yes, I know what I am losing by being in cash. Thanks for the reminder.
But Capital preervation, yes I can lose my “s” .
But, the market is finally coming to us.
I will be loading up on 5.5-6% IG issues soon enough.
Inflation, eventually turns to a recession, so 6% yield, will be adequate, I hope.
Still working at 70, so income stream is still strong.
If you have ideas, don’t be shy about posting them.
He’s breaking even while all of us are losing money. Buy back in cheaper for a net profit. Or is it a net non-loss?
Not sure if anyone was looking today, but bought 200 shares of UBP-H today around $25.51. They are callable next September, but currently trade with about .13 cents of accrued dividends. So backing off the accrued, think I got them around $25.38 with my quick math gives them about a 5% YTC. Certainly not a home-run, but a decent 5% hold in my IRA account.
They are thinly traded at times, but think it was a good day to purchase 200 shares. Happy investing to all.
KL – Assuming QOL’s description is right, I think your math is off…. last coupon payment was 10/31 so there’s only 7.38¢ of accrued I think… and with call being 9/18/22, at 25.436 backing out accrued, I’m coming up with 4.11% YTC… to be honest, my calc feels a little chintzy but I did do it twice and that’s what the Fidelity bond calculator comes up with..
Right. And there are a lot of places to put 4% yielding money to work… but that is not enough for the risk of a NY based small cap reit for me.
2wr – very possible my math was off today, as I did a quick calculation on the numbers. Thanks so much for correcting me and my error, much appreciated.
Greatly appreciate the correction, as I had to make a 5 minute decision. Still maybe a good coupon rate for me and thanks so much for the clarification. Much appreciated!
I own the H and K issues. I agree with you that the H is likely to be called in September. I have owned their other preferreds which have all been called. I like Urstadt Biddle. They own the shopping center in my town which is anchored by a large grocery store.
You mentioned MNR-C in a post awhile back. I had then 400 shares and you got me thinking so I added another 500. Do you have any ideas for replacing them?
Back in December I started buying PDI, a PIMCO CEF. I have had PDI and other PIMCO CEFs for years. You might want to consider a small position to see if PDI meets your requirements. A poster on another forum said “every month a train pulls into your station and drops off a lot of money”.
FPI and LAND both up 5%-ish today on no news– at least, no news that I can find. Sector rotation into agriculture?
With FPI there’s probably still some noise going on from the effects of the FPI-B conversion, but taking LAND as the cleaner example, in a way, they’re just playing a little catch-up plus because it (as well as FPI) was inexplicably down 3% -ish on Friday……. For whatever reason they’re doing what they’re doing now, I’ll take it….. ha
well, someone is not going to have a happy holiday season if this gets signed into law….
RENTS FROM PRISON FACILITIES NOT TREATED AS QUALIFIED INCOME FOR PURPOSES OF REIT INCOME TESTS.
Is there any REIT left that is a prison operator?
GEO and CXW are the symbols.
GEO has done well for me. Current annualized yields based on my last dividends are 10%, 12+% and 13+% depending on bond. My returns are better since I purchased at lower prices. There is political football with private prisons. Democrats want to get rid of them while Republicans seem to be OK with them. GEO also have some international presence. There is a good recent analysis on SA. GEOs last dividend on common stock was Jan 2021. They stopped paying to pay down dept and other uses. That is not good for common holders but good for bond holders. They have bonds maturing 4/23, 10/24 and 4/26.
CXW has also suspended dividend on common stock. I sold their bond in May.
I know touching on this topic seems inflammatory and political, but by direct logic there are some organs of society that should NOT be privatized because it inhibits possible scrutiny and reform due to special interest and entrenchment of dogmatic social laissez-faire.
Reagan Era policy and mythos may be entrenched but allowed cancellation if necessary.
There is room for morality and ethics in government, Wall Street and personal decision. It just takes tougher choices and policy. There are many areas to consider!
Anyone wondering re NLY-G’s (6.5%) sudden drop over past 4-5 days? Catching up to NLY-I maybe… G has another 1.5 years to go before floating at ~4.2% but too soon for that taper. No news on parent NLY.
Someone has been selling higher quality MREITs which trade at a premium. Look at NLY-I and AGNCO. Good buying opportunities.
They were overpriced. Now they’re back to reality. Don’t know if it’s a buying opportunity or not. I bought some NLY-F on the drop but not G.. Swapped some AGNCM for AGNCO, didnt add any.
In this environment, I’d call AGNCO solid. A few years left of 6.5% yield then floating at 5%+ is pretty good for money good mREIT. Over 5x coverage to common and think they are 100% agency. But I agree shares can be volatile..
Bpypn had a nice gain today, but Bpypm still looks better-higher rate, longer call. Am I missing something? Time to swap I think.
Not sure if anyone is looking at UBP-K today, but I have been picking up shares over the course of the day. They were trading in the $26.50 range just five days ago, but can be bought this afternoon at $25.93. They go ex-dividend on 10/14, which is only a little more than a week from now. Not callable until 10/2024, so there is three years of call protection.
My quick calculation math shows a Yield to Call of about 5.12%. Certainly nothing great, but I have some additional funds to work with this month. The original coupon rate on the security is 5.875%. The UBP-H at $25.66 looks interesting as well, considering it goes ex-dividend on 10/14 too. It is callable on 09/18/2022, but my quick math this afternoon shows a Yield to Call on that issue at a little over 5%. Not too bad if the security is called next September. The coupon rate on the H shares is 6.25%, so there is a decent chance it could be called.
Once again, nothing real exciting here – but I’m tired of sitting with some funds in cash and won’t be a buyer of any of the new issues with the ultra-low coupon rates such as the VNO-O 4.45% series.
ABR-D is a 6.375 Yielder.
The last ex-div date was 7-14-21. It makes sense if the next ex-div date is 10-14. Well it’s offered for sale at 25.43 and the dividend should be .3985.
That would make it a 25.03 entry.
Is it a value here?
I would but I already have a very hefty load of ABR-E.
Your CLDT-A suggestion earlier this week (Tues) was a beaut. Bought it, captured the div and sold the next day for a small gain.
The price recovered the entire div almost as soon as the market opened the next day.
Glad you did well with CLDT-A
I’m still holding 1684 shares of it.
I do expect this to get back to 26 in a few weeks.
As for ABR D/E
I own 1500 shares of D
Once Ex-Div date is met, I make $599
Then when no one is looking, I swap D with E.
Good hunting, oops you’re a bear.
Well done, Newman. Keep em coming.
Thank you for the reminder. I just added. Abr did well during covid. I sold their common way too early but I will hold their new preferred.
Dividends were just declared
UNIONDALE, N.Y., Oct. 01, 2021 (GLOBE NEWSWIRE) — Arbor Realty Trust, Inc. (NYSE: ABR), today announced that its Board of Directors has declared cash dividends on the Company’s Series D and Series E cumulative redeemable preferred stock of $0.3984375 and $0.34288 per share, respectively. The Series D preferred stock dividend reflects accrued dividends from July 30, 2021 through October 29, 2021. The Series E preferred stock dividend reflects accrued dividends from August 11, 2021 (the date of issuance) through October 29, 2021. The dividends are payable on November 1, 2021 to preferred stockholders of record on October 15, 2021.
Anyone know a lot about INVH?
They are a REIT that owns more single family housing than anyone in the country, and the stock is trading near all time highs.
They just did another offering of shares a week ago, and this screams to me that they are striking while the iron is hot, because I would not want to be in residential real estate right now, it seems like that market is primed for a crash in the very overheated markets, which is where they seem to be concentrated.
MNR will have to pay EQC up to $10 million for the merger transaction termination: https://d18rn0p25nwr6d.cloudfront.net/CIK-0000067625/80a64c66-8ec2-467d-b000-d1ff336c109d.pdf
No announcement on a call for MNR-C, though.
Wonder if the failure of the deal will disappoint some MNR-C holders, who might dump it.
I entered a bid at par in the event this might happen.
Both the common and the preferred ended higher on the day after the news broke of the vote failing to approve the merger (on the MNR side only). Interesting bet, though, and I hope you snatch some up on a big sell-off but this puppy has been so stubborn and sticking very close to ‘trading flat’, so to speak.
I still think we’ve not heard the last from Zell. He knows how to play the game, will collect the breakup fees and I think wait a bit, maybe coming back to the table should the market brush or slam into the rocks. Until then, I look forward to continuing to collect those divvies.
What about Starwood? Now the massive breakup fees will not have to be paid (just $10 mil), so that translates to increased price for shareholders should they come back with their last proposal. Should they do come back, there’s no plan included for the fate of MNR-C.