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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (32776)	11/14/2008 1:44:22 PM
From: Paul Senior	Read Replies (2) \| Respond to of 78659

EKS. Re. REITS. I am out of BDN. Holding on to FR, and will add if it drops to new lows on no adverse news. Have a few others. BK a possibility for some, it seems. All very losing positions for me. I may add to [t]FUR[/t]. Just suffer along with the others.

To: E_K_S who wrote (32776)	11/14/2008 4:27:57 PM
From: Paul Senior	Respond to of 78659

LXP. Two real estate companies that are alleged to have excellent/astute top managers are Vornado (VNO) and Winthrop ([t]FUR[/t] (<span style='font-size:11px'>LAST</span>: 2.35<span style='font-size:11px'> 11/14/2008 4:02:28 PM</span>) ). The guys who manage these two companies decided to leverage up their companies a little and make an investment in Lexington Realty Trust [t]LXP[/t] (<span style='font-size:11px'>LAST</span>: 5.45<span style='font-size:11px'> 11/14/2008 4:11:27 PM</span>) by purchasing several million shares at $5.60/sh from a large stockholder. Also, at that time LXP itself decided to buy several million shares, also at $5.60/sh. biz.yahoo.com When the news came out 10/28 the stock ceased its downfall and popped above $5.60/sh. As of today, the stock has now fallen back below $5.60. At current stock price I have to bet that there are some people somewhere within FUR or VNO (and LXP) who know their real estate and can determine good real estate values when they see them. For whatever reason, these fellows believe the best use of their companies' money now (as of 10/28, anyway -- maybe a lot has changed since then) is an investment in LXP. I will follow along. I am holding a losing position in LXP since last year, and today I added a little more shares under $5.60.

To: E_K_S who wrote (32776)	12/26/2008 9:12:02 PM
From: E_K_S	Respond to of 78659

Rebalanced my entire REIT portfolio of stocks to now include 60% preferred shares and 40% common. Previously I owned only common shares. I was able to lock in an average yield on the preferred shares of 22%. I averaged down on my common share cost basis (took some short term losses where allowed) and moved the proceeds into higher yielding preferred shares. Many of these preferred shares have already had a significant move higher (ie. BDN preferred C up 50% in last 30 days). The higher yield and safety of the preferred shares is what attracts me. I think the market was not pricing these preferred shares correctly and still believe many of these series of preferreds are undervalued. I expect these yields will move significantly lower (back to more normal historical levels) as both the common and preferred shares move higher in price. Many of these REITs are selling significantly below BV (even when analyzed from 2002 price levels). This industry is not without risk. A lot of these firms have to rollover their debt in the next few years which could be at a historical price spread to treasuries. Their cost of funds will be very high if long term rates do not come down significantly in the next 36 months. Their rental incomes could come under pressure with a continued slow down in the economy. Therefore property (regional) locations and types (warehouse. industrial, apartment) are important in your REIT property mix. I have stayed away from all hotel and SFR REITs. My strategy is on any recovery in the industry (maybe 2-3 years) peel off the common shares and keep the preferred shares for income. My total exposure of REITs to my taxable portfolio is quite small (about 2.5%) but their income contribution component is HUGE about 4x my average portfolio dividend return now around 5%. Preferred dividend income is taxed like ordinary income (ie. interest income) and does not receive the preferential treatment like qualified dividend income. It's possible that with an Obama administration future qualified dividend income (perhaps in FY2010) will be taxed at the same rate as ordinary income. If this occurs, the difference in the tax rates on the preferred dividend income and common dividend income should be zero (preferred dividend income is now taxed about 10%-15% higher than qualified dividend income). At this stage in the cycle, if the REITs can survive (there may be a period of a few quarters of non-dividend payments on the common), the risk reward of owning the preferred shares is quite attractive. EKS