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.
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9/7/2024
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Hi Pig Pile, there was no reply button in Sandbox re your Postal Realty inquiry PSTL, so thought I should just post here in REIT chat. Also wanted to say thank you for all your ideas and posts always good stuff!
I was long PSTL and moved a 7% gain plus div into a pfd not sure what one more or just me moving into more pfds. Spodek CEO and Donahoe board Chair know the best properties to get into; Spodek been doing postal r/e for years and Donahoe of course was Postmaster General. Spodek was buying shares all thru the $13’s and is up to about 920k shares, Donahoe’s stable modest holding.
Is the 6.65% yield enough compared to a solid pfd now, of course some hope/room for cap appreciation and maybe some modest div increases but they cut it close on FFO/AFFO payouts so not sure how much they’d raise. They are putting 3.5% inflation riders into the new leases and again given their ‘insider’ knowledge of the biz and the locations probably pretty solid if ‘boring’ money. Insider trading; mostly positive again on CEO buying for sure. http://www.openinsider.com/screener?s=PSTL&o=&pl=&ph=&ll=&lh=&fd=1461&fdr=&td=0&tdr=&fdlyl=&fdlyh=&daysago=&xp=1&xs=1&vl=&vh=&ocl=&och=&sic1=-1&sicl=100&sich=9999&grp=0&nfl=&nfh=&nil=&nih=&nol=&noh=&v2l=&v2h=&oc2l=&oc2h=&sortcol=0&cnt=100&page=1
Hope this helps a little, take care thanx again PP!!
Bea, thanks for your rundown. Fitting the dividend in was my worry too, that and settling in on this after that nice run up recently, sounds like maybe you got in early enough to take the nice quick cash in and head out. I think I’ll be more interested if it were to head back down into lower 13’s.
The Medical Properties Trust saga continues. Bankrupt MPW Tenant Steward Health is asking the State Of PA for an immediate 1.5 million cash infusion or it will close a hospital. A bargain: Steward got 30 million from Massachusetts. Bloomberg reports that Steward just sued MPW which if I remember correctly gave Steward a 75 million cash infusion.
MPW has Strong Sell, Strong Buy and Hold ratings at The Other Website. MPW is up 20% in the last 6 months. MPW is down 33% in the last year. A split opinion there. One for the traders. Or those who like 13% dividends and believe that the safest dividend is the one that has been cut.
No interest in MPW. Does serves as a reminder to look at portfolio concentrations in the REIT quarterlies. JMO. DYODD
Bankrupt Steward Demands State Funds to Keep Hospital Open, Pennsylvania AG Says
https://finance.yahoo.com/news/bankrupt-steward-demands-state-funds-183502976.html
I travelled 60 miles for surgery because Seward was better than our crappy local hospital. Sad to see them go. Apparently it’s not cost effective to provide adequate service.
Looks like none of the pundits on the stock boards read all the way through the Reuters article or understood the possible implications for MPW. (MPT in the Reuters article is Medical Properties Trust, ticker MPW.)
“Steward’s other creditors intend to file a separate complaint challenging the transactions that led to MPT’s ownership of the hospital real estate, according to Steward. The creditors’ action would “raise a bona fide dispute as to whether MPT actually owns the underlying real property,” Steward said in Monday’s complaint.”
“Bankrupt Steward Health sues landlord over stymied hospital sales”
https://www.reuters.com/legal/litigation/bankrupt-steward-health-sues-landlord-over-stymied-hospital-sales-2024-08-19/
Nor did the subscription pundits read down in the Miami Herald article
“The health company also is asking the court to reject the master lease it has with the landlord for its hospitals in Florida and several other states, similar to how the master lease for its Massachusetts hospitals was rejected in July.”
These Florida hospitals are for sale. Will a dispute over land affect what’s next?
Read more at: https://www.miamiherald.com/news/health-care/article291177580.html#storylink=cpy
JMO. DYODD.
While this comment could be posted in the Bond Discussion area, I felt it applied to REITs as well. It does appear that later this year the Federal Reserve may decide to lower interest rates. CD rates are decent now, but hard to know where they will be in a year or two. In my retirement accounts, I’ve been trying to lock in rates of 5% + for the next 10 years and have been a heavy buyer of REIT corporate bonds this month.
Extra Space Storage (EXR) has just issued $400M of 5.35% bonds. These bonds are rated Baa2/BBB+ and are not callable until 1/15/2035. The CUSIP is 30225VAT4. Today they are trading at Vanguard at an ask price of 100.963 for a YTM of 5.229. The company has a market cap of $36B and feel pretty confident about their credit rating. They have about 3,800 locations spread across 42 states.
At least for me, these bonds are a perfect fit in the Fixed Income portion of my retirement portfolio.
Interesting readings in “The Real Deal” on Arbor. Facing shareholder suits, claims of fraud in a mobile home portfolio and risk of losing bank repo lines. The article continues “the investigation of Arbor opened by the Department of Justice and the Federal Bureau of Investigation in New York signals pressure is mounting for the multifamily lender.
Arbor reported $1 billion in multifamily delinquencies in a second-quarter earnings report Friday, a sign the firm is struggling to handle the volume of troubled loans on its balance sheets. ” https://therealdeal.com/national/2024/08/06/arbor-realty-trust-sued-by-investor-alleging-securities-fraud/
The Real Deal often has good articles. In addition to the Arbor piece, they have an article on Ready Capital, RC which just sold off some loans for 70 cents on the dollar. A more-or-less real time snapshot of how bad the CRE market still is.
The predictable reasons: the loans are secured by over-priced properties burdened with short tern floating rate debt that is rolling over at higher rates in a weak economy. Surprising to me: can’t-lose multi-family is weaker than can’t rent office. RC management seems optimistic. RC pays a fat dividend and is doing stock buy-backs. RC has notes and preferreds. I don’t own either Arbor or Ready JMO. DYODD.
Wasn’t going to do a REIT post, but Nasdaq had an in-your-face front pager tonight – “Hey You! There Is a Big New REIT IPO.” (Nasdaq screamed “largest” 3 times in just 35 words.)
It is called Lineage, ticker symbol LINE. The IPO raised $4.4B . LINE is in the cold storage warehouse business. They have ~500 facilities and use advanced technologies in what is a necessary but mundane business.
It seems like Americold COLD might be a competitor but don’t quote me on that. FWIW – Global Net Lease just unloaded 9 COLD warehouses as part of GNL’s debt reduction program, bringing in 170M. (Would rather GNL had dumped offices, but offices are the unwanted kittens of CRE. Everybody loves them but nobody wants to own one. )
LINE is up from 78 to 86 since the IPO. The REIT pumpers haven’t started touting LINE yet, so there is time to avoid the rush. JMO. DYODD.
Bear, Another one of those, “oh dear Jack, trade me some of your hard earned cash for some magic beans” I’m in a show me mood and no hurry to jump into a REIT IPO. Wake up old Rip Van Winkle in about a year after we see a year’s worth of operations.
I apologize Bear if I seem cynical, You have always had some good information and ideas regarding REITS always like hearing from you. Your suggestion on CALM was V. good even with the avian flu problem.
BFS earnings were great..as expected, happily one of my biggest positions in the D and E w$20 basis; I see earnings reported covering pfd divs 5x. Earnings after expenses etc. real money not FFO noise. REG was good to, have the P’s the old Urstadt, great REIT pfd anchors in my mix. Some buzz about Blackstone buying a shopping center REIT brought some attention to this ‘stable’ area of REITdom.
DYODD …not ‘pumping’ .. if you do anything after reading a ticker or cusip, it is so on you. Period. Illiquid, thinly traded, gold stock..whatever the case may be. And I know this would hold up in court or the SEC.. if you are being ‘advised’ by a brokerage or fiduciary – even w disclosure signed saying you knew what you were doing- you MAY have a case. MAY. Reading tickers, articles, et al on financial social media has NOTHING to do with the reality of legal financial actions. Period. So just stop. Stop. Bea
Bea, I have been in and out with this family for a decade at least. Bought on some drops and intend to keep this time unless they get bought out. Point in life I need the income now. Still will accumulate as I don’t think they are at my 3%max rule.
REIT and real estate –
– Blackstone Mortgage Trust – BXMT – Now paying a sustainable dividend of around 10%. Management sees the stock as undervalued and has announced a 150 million buyback program. Good timing by Mgmt. BXMT now even more undervalued after the 25% dividend cut announced on the same day. Stock off ~12% on the cut. The safest dividend is the one that just got cut.
Credit to Carson Block who predicted in December that BXMT would cut in the second half of the year. (Bloomberg video.) Bloomberg mentions Arbor, Apollo, KKR and TPG as competitors.
Until recently, Blackstone had been limiting withdrawals out of its private real estate funds, This change is either a sign of optimism about the recovery or an attempt to avoid panic. (Remember the movie scene where Jimmy Stewart hands cash to a depositor to stop a run on the bank.)
– Generation Income, GIPR, a net lease micro REIT, quietly omitted its dividend in a long and folksy shareholders letter. Its costly acquisitions didn’t work out.
– Deutsche Bank DB down ~9.5% on fears of commercial real estate losses (although you won’t hear much mention of real estate in the “things are fine” conf call. ) Pumpers are out on this one for those who like to buy the dip. (DB is the EU’s Wells Fargo: always a magnet for bad news. If there is a scandal, they will somehow find it. )
https://www.bloomberg.com/news/videos/2024-07-24/blackstone-mortgage-trust-cuts-dividend-by-24-video
JMO. DYODD.
A few real estate headlines, nothing new, from my faulty memory –
– Private real estate funds are limiting withdrawals due to lack of liquidity. (In other words, they have no money because they can’t sell empty office buildings.) Industry participants remain optimistic and urge patience, while using code words like “challenging” and “price discovery.” MarketWatch. Price discovery is downside asymmetric. You never hear it used when Nvidia goes up.
– Multifamily CRE is fine, very low default rates, but rates are edging up. Wolf St. Fears are that Sunbelt areas that got overbuilt with cheap money during the pandemic euphoria are facing high re-fi rates and weak rents. A lot of debt rolling over this year, anxious owners are waiting on the Fed rate cuts. NY Times This is a “don’t worry be happy” situation because Fannie and Freddie will backstop the market for shaky multifamily loans as part of their “mission.” I find this frightening in a “bugs on a bumper” 2008 sort of way.
– The WSJ ran an inconclusive article on big banks and real estate. Big Banks have real estate. But relatively less than the regionals. That might or might not be a problem. The article sounded like a philosophy term paper. I was glad I dropped my subscription.
The rush to exit commercial real-estate funds is going mainstream
https://www.marketwatch.com/story/the-rush-to-exit-commercial-real-estate-funds-is-going-mainstream-ae178260?mod=MW_article_top_stories
JMO. DYODD.
ARBOR REALTY TRUST MOST SHORTED STOCK. Great article in WSJ, I tried to gift it so hopefully not behind paywall.
Arborhttps://www.wsj.com/real-estate/commercial/propertys-big-short-isnt-going-to-plan-4559e8cb?st=rb6sa1vioypnfhi&reflink=desktopwebshare_permalink
I have avoided Arbor but know there is interest for some. Put my eggs in strong regional southern banks. And, given the expiration of Trump tax cuts slowly minimizing my REITS from taxable accounts.
If this doesn’t work remove “Arbor” in front of https
The preferred D and E offer some nice yields >8%, and the f/f F yielding ~18% to call date 10/26, and if not called, SOFR + 5.442%.
I buy ABR preferreds when the short sellers hysterically negative hit pieces drive the price down. Sell some when it bounces back.
TNT:
Here is an even better article from Bloomberg on 6/6/24 on Apartment Real Estate Syndicates where the equity investors are all getting wiped out.
In the article it states that ABR is one of the major lenders to these private syndicates. At some point one would think ABR is going to have to seriously ramp up the CECLs (Current Expected Credit Losses), no matter how many games they play. But this short does seem way too crowded.
“Real Estate Investors Are Wiped Out in Bets Fueled by Wall Street Loans
Syndicators made big purchases that are unraveling with high interest rates, adding distress to an already troubled US property market.
https://www.bloomberg.com/news/features/2024-06-06/real-estate-investors-face-crisis-as-big-wall-street-deals-unravel?srnd=homepage-americas
KT, I read that and other articles on syndicators. The low interest rates distorted the capital markets. I personally have had 4 calls from syndicators asking if I would take preferred return so they can finance rate caps and increased interest expense. My answer remains, “why would I want to take that risk for 8 to 9% when risk free is over 5%?
I invested in several deals. Thankfully, I had great GPs. The deals in Phoenix cashed out and the one remaining I invested solely because the developer took HUD financing so he has 20 + years under 3% (while others laughed at him going thru hoops when banks were giving it away free). A few others in TX are doing ok. No capital calls nor distress. I do feel sorry for some of these limited investors (and syndicators). The era of easy money made many folks rich that honestly didn’t have a clue!
One of my takes about regional banks is just this issue. I don’t think the banks will take big haircuts but the investors and syndicators may very well lose everything.
the two controversial I guess REITs I now find in my portfolio are EPR, the experiences REIT. Read thru their NAREIT transcript on SA and I had a position, will bring that to 2%. Yes theaters but the best ones in the country booming w concessions sales too and they get a % of those in some theaters they have renegotiated the terms with. About an 8.4% now on the monthly which was incr this year. Topgolf, ski resorts, Andretti ‘Karting’..slowly reducing dependence on theaters. I have the C pfds as well for a small holding.
next up in the ‘what Bea’ category is PSTL the USPS reit; about a 7.2% yield on the 13.30. Spodek the CEO has been buying shares as recently as late May and has added 80k since fall ’23. Chairman is former Postmaster General. They know the best properties to buy and build here, not expecting much div growth but navigating getting better cap rates well to adjust for higher int rates. Mail Order RX delivery, last mile small packages etc strong, local supermarkets still sending flyers ea wk, they tried to pullback and people complained! lol. Anyway like a pfd to me here.
DYODD, like Martin G but in a different way and other comments about not hanging out short end rate wise too long, while I still have 48% or so in SGOV/cash, I have been ‘moving’ out the curve w perp pfds and select income issues. Lot of work but if you are managing your own money you better do the work. GLTA. Bea
I just found and purchased PSTL the other day. Thanks for the additional info though on that one.