There are so many things wrong with this article it's hard to know where to begin.
Second, bears forget that REITs are unlike most other companies in that they own real landmark assets in real cities that have real value and have truly been crushed in price. If you are the portfolio manager of a large sovereign wealth fund or run a $20 billion portfolio at a big insurance company, you need to buy real, big things at low values to make a difference in your portfolio
OK, so if I buy shares of a REIT, I get to claim my share of their holdings? Let's see, I'll take this prime corner on this busy intersection right here....
IT'S STILL PAPER ASSETS! If the REIT went bankrupt, your share = $0.
And "being truly crushed in price" is IRRELEVANT. Or is he claiming that US equities markets are highly inefficient, and there's a big arbitrage situation here?!
Let me put it this way: Would you rather buy paper shares of a technology company that could lose its innovation edge at any time? Or half a block of Manhattan at a 50% discount? Yeah, me, too.
A bifurcation (a type of logical fallacy). "False" or "False" = false (not "true").
I heard this angle from a friend who attended a Goldman Sachs-hosted hedge fund dinner recently. He learned that the big sovereign wealth funds and insurance companies, which had representatives at the dinner, are among the quiet but big bidders for major hunks of prime U.S. real estate through private-equity funds, private transactions and public-equity companies.
Hey, if you can't trust a hot tip from Goldman-Sachs, what can you trust?
They apparently believe that the only real problem with U.S. commercial properties is their underlying high-cost debt. So to the extent that they can take out the debtors with cash, they can wait out the rest of the property recession and be ready for the next upswing. This is the advantage of being well-capitalized and having a 20-year time horizon.
Yeah, if you don't mind your bet being on the losing side for the next 20 years.
At the same time, REITs that zealously guarded their cash during the recent downturn are themselves helping to lift commercial real estate out of its epic slump. The Globe and Mail newspaper in Toronto reported last week that $5.4 billion had been spent on 990 transactions in the Toronto area alone last year, as strong REITs pounced on distressed properties owned by their weaker brethren.
Someone once told me that the 3rd buyer is the winner. The first and 2nd buyers lose their shirts.
