US - Commercial Real Estate & Reits

Re: US - Commercial Real Estate

Postby millionairemind » Mon Mar 01, 2010 7:41 pm

Published February 25, 2010

US commercial mortgage defaults soar

(SAN FRANCISCO) The default rate for commercial property mortgages held by US banks more than doubled in the fourth quarter and may reach a peak of 5.4 per cent at the end of next year, according to Real Capital Analytics Inc.

The default rate for loans on office, retail, hotel and industrial properties surged to 3.8 per cent from 1.6 per cent a year earlier, the New York-based real estate research firm said on Tuesday in a report. The default rate for loans on apartment buildings climbed to 4.4 per cent from 1.8 per cent.

'The level of distress continues to rise irrespective of improving economic trends,' Sam Chandan, Real Capital's global chief economist, said in an interview.

The US jobless rate declined to 9.7 per cent in January from 10 per cent in December, after hitting a 26-year high of 10.1 per cent in October.

Unemployment and tighter credit are hurting commercial property values, which fell 29 per cent in December from a year earlier and are down 41 per cent from the October 2007 peak, according to the Moody's/REAL Commercial Property Price Index released on Feb 22.

US banks with US$100 million to US$1 billion in assets hold 25 per cent of commercial property loans outstanding and 15 per cent of apartment loans, Real Capital data show. The biggest banks, those with more than US$10 billion in assets, hold about half of commercial loans and two-thirds of apartment loans.


'With the concentration of commercial mortgages in small and community banks, there is a potential spillover that will impinge on their ability to make loans to small businesses and families,' Mr Chandan said.

Almost US$1.1 trillion in commercial loans and US$211 billion in apartment loans were held by US banks on Dec 31, according to Real Capital.

The Congressional Oversight Panel on the financial system bailouts said in a Feb 10 report that 'the ultimate impact of the commercial real estate whole loan problem will fall disproportionately on smaller regional and community banks' that have higher concentrations of such loans.

'Some community banks seemed to have abandoned, or never really practised, sound risk management' by lending too much on real estate in their local markets, David Hendler, New York-based analyst for CreditSights Inc, said in a Feb 22 note.

The commercial default rate rose from 3.4 per cent in the third quarter, representing an increase of US$4.5 billion in defaulted loans in the period, according to Real Capital. The rate will reach 5.1 per cent at the end of this year, the research firm said.

The apartment default rate rose from 3.6 per cent in the third quarter. The jump reflected a US$1.6 billion increase in defaulted loans. Apartment defaults will peak at 5.3 per cent at the end of 2010, said Real Capital, which based its analysis on bank filings and data from the Federal Deposit Insurance Corp. -- Bloomberg
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Disclaimer - The author may at times own some of the stocks mentioned in this forum. All discussions are NOT to be construed as buy/sell recommendations. Readers are advised to do their own research and analysis.
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Re: iShares Real Estate ETF (IYR)

Postby winston » Sat Jul 24, 2010 8:02 pm

Start Here with Your Short Trades
By Tom Dyson, editor, S&A Penny Trends
July 23, 2010

After enjoying an incredible rise thanks to the federal government, commercial real estate stocks are ready to fall...

The real estate fund IYR holds a basket of real estate stocks like Simon Property Group, Vornado Realty Trust, Public Storage, Equity Residential, and Boston Properties. These companies own office buildings, malls, parking lots, storage facilities, hospitals, and industrial parks. Each month, they collect rent from their tenants and pass it on to shareholders.

As you can imagine, when the real estate crisis hit in 2008, these stocks were decimated. IYR fell more than 50% in two months... and kept falling. But after a hard bounce in March 2009, this fund is up about 80%.

A lot of people think this is a great place to invest right now. They're after the high yields that REITs offer. I think this is a dangerous place to put your money. Here's why...

First, notice the downtrend. IYR is heading lower in a series of lower lows and lower highs. Now, look at the volume. The red bars represent volume on down days. The gray bars represent volume on up days. Notice how the red bars are much taller than the gray bars. Whenever IYR rises, volume shrinks, but whenever it falls, volume expands.

This tells us large investors are selling these stocks with enthusiasm... and there's little buying interest to support shares.

Now, look at the Relative Strength Index (RSI). The RSI is a momentum indicator... it's a sort of heart rate monitor for price trends.

You want momentum to rise with the trend. When momentum heads lower, while prices head higher, it's a sign the trend is losing steam. IYR's momentum peaked in mid-March and started slowing. It signaled a major trend change. At the end of April, IYR began to fall.

IYR has enjoyed a huge price run since March 2009, but now it's being sold heavily, its uptrend is losing steam, and it's making a series of lower highs and lower lows. I expect this bearish action to continue... and it's time bet on the uptrend ending.

http://www.growthstockwire.com/archive/ ... jul_23.asp
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Re: iShares Real Estate ETF (IYR)

Postby winston » Tue Aug 24, 2010 8:03 am

This Is Why "Black Market Income" Is So Attractive Today By Brian Hunt
August 23, 2010

In the past few months, Growth Stock Wire's publisher, Stansberry Research, has received a tremendous amount of feedback on our "Black Market Income" idea.

This strategy is about avoiding conventional Wall Street income investments... and looking "off the beaten path" for high-yield opportunities.

In today's essay, I'm going to demonstrate why these ideas are so useful... by showing you one awful chart of a popular traditional income investment: commercial real estate.

Every now and then, commercial real estate makes a great income investment. Nine years ago, real estate investment trusts (REITs) traded for around book value and yielded around 8% on your money. It was a perfect time to jump into them instead of overpriced tech stocks. Nowadays, they're hardly a good deal...

With over $2 billion in assets, the major commercial real estate fund (IYR) is one of the largest and most liquid ways to own a basket of America's biggest commercial real estate stocks. Its trailing 12-month yield is around 3.5%. And it sells for 2.7 times book value.

Below is a chart of IYR... As you can see, this fund has enjoyed a tremendous 100% rally off its early 2009 lows. But in the past few months, this uptrend has stalled... And it's locked in a terrible trend of "big money selling." Let me explain...

At the bottom of our chart is a series of red and black vertical bars. These bars represent the trading volume on a given day in the IYR. Red bars represent the trading volume on days the market declined. Black bars represent the trading volume on days the market advanced. The taller the bar, the greater the volume.

After enjoying a weak-volume rally in March and April (A), the IYR suffered a big selloff on massive trading volume in May (B).

This huge selloff has been followed with a bearish series of "lower highs and lower lows." Rallies now come on tepid volume and declines come on higher volume... including the recent selloffs in August (C). This tells us there is no real buying power interested in this asset. The path of least resistance is down.

More than any other kind of investor, the income investor must obsessively focus on risk. He can't suffer large losses that erode his ability to compound or generate current income.

Right now, commercial real estate has plenty of risk. A sluggish economy suffocates demand for office space, shopping malls, and hotels. It squashes any rental hikes that might beef up a measly yield. Considering these risks, and IYR's ugly chart, it's a no-brainer to avoid conventional REITs right now.

If you're after income, there are far better risk/reward situations in the market. Take a look at other ideas, like mortgage REITs, covered calls on precious metals, or blue-chip dividend growers. All offer much more safety... and more attractive yields.

http://www.growthstockwire.com/
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Re: US - Commercial Real Estate

Postby winston » Fri Feb 04, 2011 5:27 pm

Every single article above says that there would be a long downturn. And we now get this news ....

U.S. Commercial Property Recovery Spares Economy Another Blow
By Brian Louis and David M. Levitt

From Manhattan office towers to apartments in Florida to retail properties in Washington, commercial real estate values are rising, defying predictions of a collapse that would drag the U.S. economy back into recession.

Prices of commercial properties sold by institutional investors surged 19 percent in 2010, the second-biggest gain on record, according to an index developed by the MIT Center for Real Estate.

Investments in office properties, the largest part of the market, more than doubled last year to $41.6 billion, according to Real Capital Analytics Inc., which tracks commercial property sales globally.

Near record-low interest rates are luring buyers with the prospect of cheaper financing and higher returns. Lenders are beginning to sell distressed properties and loans as rising earnings give them a cushion to absorb losses. Investors, convinced the worst is over, have pushed prices on commercial mortgage-backed bonds to the highest level in two years.

Commercial real estate transactions may climb 40 percent to $135 billion this year, Chicago-based Jones Lang LaSalle Inc., the second-largest publicly traded broker, said on Feb. 2. U.S. commercial real estate values, which fell 45 percent from the October 2007 peak to the trough in August 2010, have risen three consecutive months, according to Moody’s Investors Service.

Last February, a Congressional watchdog panel said a deteriorating commercial real estate market had the potential to wreck the U.S. economy. The Congressional Oversight Panel of the Troubled Asset Relief Program said in a report that almost half of the $1.4 trillion in commercial property loans set to be paid off by 2014 were underwater, meaning the borrower owed more than the property was worth.

“That tsunami of distress that had been forecast has not really materialized,” said Brian Stoffers, co-president, CBRE Capital Markets, a financing and investment sales division of Los Angeles-based broker CB Richard Ellis Group Inc. “The market’s getting stronger.”

The recovery isn’t complete. The MIT Real Estate Center transaction index is 28 percent from its June 2007 peak. On an accumulated total return basis, which includes net income generated by the properties, the index is 16 percent below the high, the Cambridge, Massachusetts-based center said in a Feb. 2 statement.

Markets hit hard by the housing bust are struggling and are less likely to recover quickly, PriceWaterhouseCoopers LLP said in its annual Emerging Trends in Real Estate survey in October. Las Vegas, Milwaukee, St. Louis, Detroit and Cleveland are among the cities that scored the lowest in its poll of investors.

“Many secondary cities and most tertiary markets just do not appear on investor radar screens,” the study said.


http://www.bloomberg.com/news/2011-02-0 ... o-hit.html
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Re: US - Commercial Real Estate

Postby winston » Sun Feb 06, 2011 9:23 am

2nd article that I've seen about the improving US Commercial RE ..

Commercial Real Estate Makes A Comeback, Defying The Predictions Of A Meltdown And Crisis By Mark Perry

February 2010 in the Huffington Post – “There is a commercial real estate crisis on the horizon, and there are no easy solutions to the risks commercial real estate may pose to the financial system and the public,” says a report issued Thursday by the Congressional Oversight Panel, the bailout watchdog led by Harvard Law professor and middle-class advocate Elizabeth Warren.

MP: Around that time, there were many other similar predictions with headlines like “a commercial real estate bubble set to burst,” the “coming collapse of commercial real estate,” and “commercial real estate collapse bigger than subprime implosion,” and “commercial real estate will collapse.”

Now we get a much different story from recent data released by MIT on commercial property transactions in 2010:

MIT Center for Real Estate (Feb. 2011) — “Transaction prices of commercial properties sold by major institutional investors gained 11.9 percent in the fourth quarter, and 19.3 percent for all of 2010, according to an index developed and published by the MIT Center for Real Estate.

Both of these returns were the second highest in the history of the index, which goes back to 1984. (The record-holding quarter remains the second quarter 2005 which had a 17.8 percent gain, and 2005 was the record year with a 27.2 percent price increase.)

Measured on a total return basis, including net income generated by the properties (as well as the price gain), the 2010 result was 25.2 percent, which was also second highest after 2005’s 32.2 percent.”

http://www.dailymarkets.com/economy/201 ... nd-crisis/
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Re: US - Commercial Real Estate

Postby winston » Thu Nov 03, 2011 8:28 pm

A Successful Developer's Words of Wisdom By Dr. Steve Sjuggerud
Thursday, November 3, 2011

The life story of Bob Mayer is titled "Without Risk, There's No Reward: Tales, trials and truisms from the amazing life of a pioneering southern California developer".

I met Bob last week, while staying at a hotel he built… the fantastic Hyatt at the Huntington Beach Waterfront.

It turns out Bob is a subscriber of mine. He's also a gifted storyteller and a successful entrepreneur.

My favorite way to learn about investing in an area that I am not an expert is to seek out the experts – guys who have legitimately succeeded – and learn from them.

Bob's one of those guys…

Bob has lived an incredibly full life… He's in his eighties… But he could easily pass for a man in his fifties. When we met, he seemed happy – on top of the world.

I'm sure not many real estate developers feel that way today. Bob must be doing something right.

He started from humble beginnings, but he always had big dreams. He joined the Army Air Forces out of high school during World War II with visions of being a fighter pilot.

After the war, he spent the early 1950s "working hard, pushing wheelbarrows," earning $1 an hour for a construction company.

In 1955, with three kids to feed at home, he started his own business. He succeeded. By the 1960s, his company was the largest apartment developer in Southern California.

In the next few decades, he ventured into other businesses… extended-stay hotels, banking, Las Vegas casinos, and more.

Bob was certainly never afraid to dream – and never afraid to try to make it happen.

When we met, he told me "Running a hotel isn't the fun part. The fun part is getting there… It's starting from nothing, and turning it into something… just to see if you can make it work. That's the fun part."

Bob retired in his 50s in 1980… and found himself bored. While in high school, he lived in Huntington Beach, California. His mind kept wandering back to Huntington…

He had dreams for a certain run-down 50-acre parcel of oceanfront land, just south of the Huntington Pier. He pursued those dreams…

Out of all his endeavors over the years, Bob says his post-retirement dream for developing the Huntington Beach Waterfront "carried the greatest likelihood of failure.

Yet it turned out to be the most successful of all… and was unquestionably worth the risk."

To get the job done, Bob had to navigate through the city bureaucracy, lawsuits, relocating existing residents, dealing with environmental issues (including wetlands and an abandoned gas station on the property), getting (and keeping) financing and permits to build hotels… The list goes on and on.

Right from the start, when the lease on this chunk of earth on the beach was in a bankruptcy sale, Bob was mentally calculating his downside risks versus his potential rewards. Bob wrote:

I calculated that the worst-case scenario would have me merely running the existing mobile home park, golf course, and motel until 2013, and then walking away at the expiration of the lease.

I would have enjoyed a modest but reasonable return on my original investment for 35 years. With this scenario as my downside, I felt comfortable enough to begin thinking about the possible upside.

The rest of the story is fascinating, as are Bob's other stories of success and failure in a life well lived.

After "over twenty five years of diligent effort, we finally came to terms with the City of Huntington Beach…" Bob wrote in his book.

"While it has taken much longer than I had ever envisioned… it has produced results far more impressive than any I had ever thought possible."

If I want to learn about real estate, I don't want to read a "how-to" book about real estate, written by a journalist who has never been a property investor…

I want to hear stories directly from a successful entrepreneur and figure out how I can apply the lessons that are between the lines.

And I want to hear his mistakes so I can try to avoid them. The stories of Bob's successes and his failures are both fun to read.

His book is titled, Without Risk, There's No Reward. It's a good read from a guy who lived it – and succeeded. I suggest you check it out…

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Re: US - Commercial Real Estate

Postby winston » Fri May 15, 2015 11:00 pm

No. 2 Player is My No. 1 Pick in This Breakout Sector By Melvin Pasternak

The Minnesota Real Estate Journal brought a striking fact to my attention: There are three times as many self-storage facilities in the United States as there are McDonald’s (NYSE: MCD).

It may seem like there is practically a Golden Arches on every street corner, with the fast food chain operating 14,350 restaurants in the country in 2014. But the number of storage facilities dwarfed that at 48,500.

Currently, about 10% of Americans rent a storage facility. And about 50% have used one at some point in their lives.

These numbers will grow as storage demand increases. According to the Self Storage Association, over the past 40 years, this has been one of the fastest growing segments of the commercial real estate sector.

Stephen Mutty, senior vice president of real estate service company Colliers International, said the industry is growing because people “simply can’t throw stuff away.” So, consumers pay to buy it, and then they pay to store it.

The U.S. self-storage industry generates more than $24 billion in annual revenue, and market research firm IBISWorld estimates that figure will grow to $31 billion in 2019.

The sector has been described by analysts as “recession resistant.” Will McKitterick of IBISWorld said, “The countercyclical nature of the self-storage industry helped it weather the recession better than most industries. Now that the economic recovery is in full swing, revenue growth over the next five years is expected to be even more robust.”

One of the best ways to profit from this trend is with Extra Space Storage (NYSE: EXR), a real estate investment trust (REIT) that owns, develops, acquires and operates self-storage properties across the United States.

Jefferies recently issued a bullish report on the self-storage REIT sector, noting positive earnings from major players, stronger-than-expected same-store net operating income, rent growth and improved occupancies.

Extra Space Storage is the nation’s second largest self-storage operator, as measured by revenue and storage space, trailing only Public Storage (NYSE: PSA).

But when it comes to share price performance, EXR is the clear leader, handily outperforming its competitor. Year to date, PSA has gained about 7% while EXR jumped nearly 20%.

Extra Space currently owns or operates about 1,100 self-storage properties with a total of 750,000 units and 80 million square feet of rentable space.

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Re: US - Commercial Real Estate

Postby winston » Thu Nov 26, 2015 2:05 pm

Score BIG With Storage! 3 Sure-Thing REITs

Want continued high returns from REITs? The storage sector has the goods.

By Aaron Levitt

Source: Investor Place

http://investorplace.com/2015/11/storag ... lafw3YrKM8
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Re: US - Commercial Real Estate & Reits

Postby winston » Wed Dec 16, 2015 9:12 pm

Self-storage REITs Public Storage and CubeSmart soar to new all-time highs… up 75%-plus over the past three years.
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Re: US - Commercial Real Estate & Reits

Postby winston » Fri Dec 18, 2015 4:34 pm

Let’s Go Shopping! 3 Mall REITs You Can Bank on This Christmas

These mall REITs offer value and big dividends

By Aaron Levitt

Source: Investor Place

http://investorplace.com/2015/12/mall-r ... nPCxhV96M8
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