Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: kahunabear who wrote (30326)	7/28/1998 9:38:00 PM
From: Broken_Clock	Read Replies (1) \| Respond to of 132070

saw...be careful which REIT you're looking at. I would look at short term debt as a concern. Commercials loans are also usually adjustable rate. If rates move up the bottom line cash flow is quickly affected unless there is room to raise rents. Should the economy slow, the choice is loose tenants or reduce rent to keep them. Another problem is: What will LTC buy now that they sold? It is getting very hard to find properties that make sense in many areas.

To: kahunabear who wrote (30326)	7/29/1998 11:22:00 AM
From: Knighty Tin	Read Replies (1) \| Respond to of 132070

WS, If they are smart enough to sell properties at this manic top in the real estate market, then they are definitely buys. However, if they are holding bloated properties waiting for the greater fool to show up, then they scare me. I think that REITS are essentially closed end mutual funds, so selling above book value is similar to a CEF selling at a premium. The fact that they do sell above book is an indication of the way the public stretches out for yield. As long as risk-free rates remain low, these things are golden. But, the first decent uptick in short term rates and they die. Since we are at a multi-year low in rates right now, I wouldn't want to own them straight out, no matter how relatively attractive they are. But that is predicated on the idea that I think rates are going much higher over the next five years. However, if you were to buy some of the cheaper health care REITS and short the tax scam Reits, ala HOT, in a paired trade, I think you would have a nice deal. And, if you disagree on rates, and you believe they can drop even further without causing deflation (another REIT bugaboo), then they may be a buy. You have certainly identified some of the cheaper players. MB