The smart money is getting out of real estate
invite response
2015 Dec 9, 11:22am 6,967 views 23 comments
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2
EBGuy
2015 Dec 9, 12:03pm
REITNation is where they're going to bury the bodies this time around.
Locally, in the PRoB, Zell has put his portfolio up for sale (including one large, entitled development site). He had good timing the last go around, so he is one to watch. Supposedly he is hanging on to some sites in Ess Eff, so, in theory, he could be raising development capital (though the article states a lot of cash being returned to investors).
3
lostand confused
2015 Dec 9, 12:10pm
lostand confused
2015 Dec 9, 12:10pm
Interesting, these are people who actually bought thousands and thousands of properties over the last few years. Very interesting-maybe they see a peak?
4
epitaph
2015 Dec 9, 2:15pm
epitaph
2015 Dec 9, 2:15pm
Since we are so close to the dawn of 2016 I'll get my predictions in for the coming year:
RE: Down
Stocks: Flat
Bonds: Up
Gold: Flat to slightly up
Treasuries: LOL
5
Strategist
2015 Dec 9, 2:26pm
Strategist
2015 Dec 9, 2:26pm
RE: Up a lot
Stocks: Up a lot
Bonds: Slightly down
Gold: Down
Treasuries: LOL
6
KgK one
2015 Dec 9, 2:27pm
So who is buying them? For another company to to buy, they must have done research too?
7
FortWayne
2015 Dec 10, 5:24pm
FortWayne
2015 Dec 10, 5:24pm
Here is an interesting article on commercial real estate. Even Buffet is investing into it.
http://money.cnn.com/2015/12/10/investing/warren-buffett-sears-seritage-real-estate/
8
justme
2015 Dec 22, 5:13pm
justme
2015 Dec 22, 5:13pm
Credit where credit is due: Ironman posted this story first.
This message brought to you by a progressive liberal, as part of the program to praise right-wingers when they do well.
9
justme
2015 Dec 22, 5:35pm
justme
2015 Dec 22, 5:35pm
I'll take the credit for the posting, but I'm NOT a "right-winger"!
You do seem to have a bit of a split personality, yes.
10
DD214
2022 Dec 1, 10:16am
Blackstone Just Limited Withdrawals From Its Huge Retail Real Estate Fund
Blackstone is limiting withdrawals from its huge retail real estate investment trust after a sharp rise in redemption requests from investors.
In a letter posted on the Blackstone Real Estate Income Trust website, Blackstone (Ticker: BX) said that redemption requests already have exceeded the 5% quarterly limit for the REIT, which had $69 billion of net assets at the end of October. The REIT is known as BREIT.
The news that Blackstone is limiting redemptions, or gating, the REIT has sharply depressed Blackstone shares Thursday. The stock is down 6.7% to $85.44 at 12:42 p.m. Thursday
https://www.marketwatch.com/articles/blackstone-reit-51669913002?mod=mw_latestnews
Blackstone is limiting withdrawals from its huge retail real estate investment trust after a sharp rise in redemption requests from investors.
In a letter posted on the Blackstone Real Estate Income Trust website, Blackstone (Ticker: BX) said that redemption requests already have exceeded the 5% quarterly limit for the REIT, which had $69 billion of net assets at the end of October. The REIT is known as BREIT.
The news that Blackstone is limiting redemptions, or gating, the REIT has sharply depressed Blackstone shares Thursday. The stock is down 6.7% to $85.44 at 12:42 p.m. Thursday
https://www.marketwatch.com/articles/blackstone-reit-51669913002?mod=mw_latestnews
12
Eman
2023 Mar 9, 3:59pm
Eman
2023 Mar 9, 3:59pm
This post is from 2015. The timing wasn’t optimal this time around for Sam Zell like 2007. However, he and his investors still made out great. They key takeaway for me is that he sold “non-core assets”.
13
Onvacation
2023 Mar 9, 4:49pm
Onvacation
2023 Mar 9, 4:49pm
It seems the Federal Reserve plan of funding booms that go bust until all the peons are indebted renters is working as planned.
14
AD
2023 Mar 9, 11:28pm
AD
2023 Mar 9, 11:28pm
Onvacation says
Exactly, the last ones standing are rich people. Those with cash to buy at fire sale prices.
.
It seems the Federal Reserve plan of funding booms that go bust until all the peons are indebted renters is working as planned.
Exactly, the last ones standing are rich people. Those with cash to buy at fire sale prices.
.
15
richwicks
2023 Mar 10, 2:18am
richwicks
2023 Mar 10, 2:18am
ad says
You want to think that, but property tax will just be raised, selectively, to remove individual owners.
Banks don't pay property taxes on foreclosed properties, for example.
Onvacation says
It seems the Federal Reserve plan of funding booms that go bust until all the peons are indebted renters is working as planned.
Exactly, the last ones standing are rich people. Those with cash to buy at fire sale prices.
You want to think that, but property tax will just be raised, selectively, to remove individual owners.
Banks don't pay property taxes on foreclosed properties, for example.
16
EBGuy
2023 Mar 10, 3:37pm
ad says
To that point, Billionaires Are Buying REITs (And You Should Too).
You definitely got me thinking when you mentioned INVH on another thread. Got to nosing around a bit looking at some of these REIT (and REIT like) players.
Interestingly Pretium Properties, one of the larger players post 2008 crash, has a ton of SFH rentals. To raise cash (for more purchases) several years ago their "refied" a number of properties in their portfolio at 75% LTV. This was of course securitized and tranched. Rental income flows down to the RMBS holders; Pretium runs the infrastructure for the rentals. They're currently being sued by the Minnesota AG and you can also read horror stories online about these corporate landlords. I believe (?!) Pretium holds the lowest rated tranche, which pays high interest but will be first in line if the rental income is deficient. At any rate, some REITs are 50% off highs.
It does have me wondering if I was correct in this assessment: REITNation is where they're going to bury the bodies this time around.. The commercial side has certainly taken a beating. I'm still trying to comprehend the mechanics of the residential side which seems to run off of RMBSes (sound familiar?)
Exactly, the last ones standing are rich people. Those with cash to buy at fire sale prices.
To that point, Billionaires Are Buying REITs (And You Should Too).
You definitely got me thinking when you mentioned INVH on another thread. Got to nosing around a bit looking at some of these REIT (and REIT like) players.
Interestingly Pretium Properties, one of the larger players post 2008 crash, has a ton of SFH rentals. To raise cash (for more purchases) several years ago their "refied" a number of properties in their portfolio at 75% LTV. This was of course securitized and tranched. Rental income flows down to the RMBS holders; Pretium runs the infrastructure for the rentals. They're currently being sued by the Minnesota AG and you can also read horror stories online about these corporate landlords. I believe (?!) Pretium holds the lowest rated tranche, which pays high interest but will be first in line if the rental income is deficient. At any rate, some REITs are 50% off highs.
It does have me wondering if I was correct in this assessment: REITNation is where they're going to bury the bodies this time around.. The commercial side has certainly taken a beating. I'm still trying to comprehend the mechanics of the residential side which seems to run off of RMBSes (sound familiar?)
17
HeadSet
2023 Mar 10, 6:33pm
HeadSet
2023 Mar 10, 6:33pm
richwicks says
They do around here. In fact, a bank is even liable for any previous unpaid taxes after they take title.
Banks don't pay property taxes on foreclosed properties,
They do around here. In fact, a bank is even liable for any previous unpaid taxes after they take title.
18
AD
2023 Mar 10, 7:56pm
AD
2023 Mar 10, 7:56pm
richwicks says
Whoever owns the property has to pay the property tax and HOA fees that are outstanding. I am going by what I've seen in Virginia and Florida.
So that includes also if it is foreclosed on.
.
You want to think that, but property tax will just be raised, selectively, to remove individual owners.
Banks don't pay property taxes on foreclosed properties, for example.
Whoever owns the property has to pay the property tax and HOA fees that are outstanding. I am going by what I've seen in Virginia and Florida.
So that includes also if it is foreclosed on.
.
19
WookieMan
2023 Mar 10, 8:17pm
WookieMan
2023 Mar 10, 8:17pm
HeadSet says
100% correct. You beat me to it. It's true in every state, 100%. You foreclose and the bank doesn't sell it for 1-2+ years the bank pays the property taxes and insures the property. They also pay for weekly inspections of the property, water bill, BPO's, winterization, electric, etc. We'll never see a crash like 2007 because banks understand the cost. They'll work with the homeowner first now.
2008-2012 was a once in a lifetime opportunity to buy. Banks aren't going to foreclose like they did back then. They don't loan to people that are unqualified or no doc loans either. The debt they're sitting on is solid.
The recent bank failure in SV is deposit/capital related. Real estate might play a role in that partially, but when tech is laying people off in droves, those people need to work. Factor in homelessness, shit, needles and over priced housing, etc. So they move to another state. As I've been pounding the drum about, any housing issues WILL be labor related. Cities will take a beating in combination with layoffs and out migration to lower COLA areas. This isn't an IF it's a when does it happen for places like Denver, Nashville, Austin, etc. Smaller cities and generally towns will see a shortage of housing and price will go up. Incentive to build in this high interest time is not there. So prices will continue to rise outside of hipster cities and outside of CA.
richwicks says
Banks don't pay property taxes on foreclosed properties,
They do around here. In fact, a bank is even liable for any previous unpaid taxes after they take title.
100% correct. You beat me to it. It's true in every state, 100%. You foreclose and the bank doesn't sell it for 1-2+ years the bank pays the property taxes and insures the property. They also pay for weekly inspections of the property, water bill, BPO's, winterization, electric, etc. We'll never see a crash like 2007 because banks understand the cost. They'll work with the homeowner first now.
2008-2012 was a once in a lifetime opportunity to buy. Banks aren't going to foreclose like they did back then. They don't loan to people that are unqualified or no doc loans either. The debt they're sitting on is solid.
The recent bank failure in SV is deposit/capital related. Real estate might play a role in that partially, but when tech is laying people off in droves, those people need to work. Factor in homelessness, shit, needles and over priced housing, etc. So they move to another state. As I've been pounding the drum about, any housing issues WILL be labor related. Cities will take a beating in combination with layoffs and out migration to lower COLA areas. This isn't an IF it's a when does it happen for places like Denver, Nashville, Austin, etc. Smaller cities and generally towns will see a shortage of housing and price will go up. Incentive to build in this high interest time is not there. So prices will continue to rise outside of hipster cities and outside of CA.
20
AD
2023 Mar 10, 8:27pm
AD
2023 Mar 10, 8:27pm
WookieMan says
Not sure California with its limited supply of housing is going to see declines due to high unemployment. Seems like laid off workers will be able to find comparable jobs and not have to move. So the drop in real estate will be because of affordability and not because major increase in supply as people abandon their homes and/or sell in panic.
.
Cities will take a beating in combination with layoffs and out migration to lower COLA areas.
Not sure California with its limited supply of housing is going to see declines due to high unemployment. Seems like laid off workers will be able to find comparable jobs and not have to move. So the drop in real estate will be because of affordability and not because major increase in supply as people abandon their homes and/or sell in panic.
.
21
Patrick
2023 Mar 10, 9:33pm
Patrick
2023 Mar 10, 9:33pm
The rise in interest rates has been huge, and it seems likely to continue. Most people pay as much as they can afford, and with substantially higher rates, the price they can pay should be substantially lower.
22
GNL
2023 Mar 11, 5:00am
GNL
2023 Mar 11, 5:00am
ad says
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property – until their children wake-up homeless on the continent their fathers conquered.”
Onvacation says
It seems the Federal Reserve plan of funding booms that go bust until all the peons are indebted renters is working as planned.
Exactly, the last ones standing are rich people. Those with cash to buy at fire sale prices.
.
If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property – until their children wake-up homeless on the continent their fathers conquered.”
23
GNL
2023 Mar 11, 5:30am
GNL
2023 Mar 11, 5:30am
Patrick says
If inventory stays low, I believe it really will become "you will own nothing and be unhappy".
The rise in interest rates has been huge, and it seems likely to continue. Most people pay as much as they can afford, and with substantially higher rates, the price they can pay should be substantially lower.
If inventory stays low, I believe it really will become "you will own nothing and be unhappy".
http://www.businessinsider.com/smart-money-getting-out-of-real-estate-2015-12
The smart money is getting out of real estate
Real estate investing is all about timing, and Sam Zell knows this better than anyone.
He sold his real estate firm, Equity Office, to Blackstone Group for $39 billion near the peak of the market. This was back in February 2007—only months before real estate credit markets started to spiral out of control.
He’s doing it again.
At the end of October, his real estate fund, Equity Residential, agreed to sell more than 23,000 apartment units to Starwood Capital for $5.4 billion. The sale represents over 20 percent of the Equity Residential portfolio.
The fund plans to sell another 4,700 apartment units in the near future. Most of the proceeds will be returned to investors in the form of a dividend sometime next year.
Another real estate fund managed by Zell, Equity Commonwealth, has sold 82 office properties worth $1.7 billion since February. The fund plans to raise another $1.3 billion by selling off more properties over the next few years.
Zell is cashing out of non-core assets after the run up in real estate prices in recent years. Rather than reinvest, much of the cash is being returned to investors. The message he is sending is clear—it’s time to sell.
High prices + rising interest rates = time to sell
REITs (real estate investment trusts) have been one of the hottest investment sectors in the aftermath of the 2008 credit crisis.
REIT prices are up 286% from their March 2009 low, compared to 209% for the S&P 500 over that same period. Real estate prices have benefited greatly from the Federal Reserve’s aggressive stimulus packages and zero-interest rate monetary policy.
Real Capital Analytics data showed that commercial property values across the country reached the highest level on record in August—up 14.5% on a nominal basis and surpassing the previous inflation adjusted mark from 2007 by 1.5%.
High prices have led to record low cap rates (cap rates measure a property’s yield by dividing the annual income by the property value). The average cap rate on all property types across the US hit 5.25% in September. This breaks the 5.65% low from 2007, according the Green Street Advisors.
The data dependent Fed has trapped itself in a corner. On the one hand, they can see that property values and stock markets have skyrocketed. On the other hand, real economic growth appears to have stalled.
The Fed has tried to signal an end to its easy money policies all year long. However, poor US economic data and fear of a global slowdown has kept them from taking action.
Still, the potential for higher interest rates has caused REIT investors to take a pause. Higher interest rates make dividend yields from REITs less attractive than the safer alternatives, such as Treasury bonds. It also makes it more costly to finance new acquisitions and real estate developments.
#housing