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Neuberger Berman Real Estate Se Message Board

  • chrisanja chrisanja Feb 14, 2008 4:31 PM Flag

    Panned around looking for drop in REITs

    NRO was 5%

    AFR, etc.

    (Is there a handy list of NRO/NRI holdings?)

    1.5 to 1.8% and gained .5% back in AH.

    All REITs I looked at seemed to have low volume today.

    Better days ahead!?

    We all hope


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    • HRP looks ripe for upgrading swap transactions. With the second best price relative to cash flow out of the top 10 NRO positions, HRP looks very attractive with a 10.40% yield, Price/Book = .71, and a Current Ratio = 2.575.

      The best looking deep discounted cash flow REITS are:

      GRT (Yield 10.5%)
      AHT (Yield 13.00%) Hope NRO adds it.
      HRP (Yield 10.40%)
      CT (Yield 11.5%)
      SFI (Yield 15.00%)
      GKK (Yield 12.00%)

      These are the kind of REITs I would like to see replace some of the higher Price/Book, Price/Cash Flow, and Price/Dividend positions in our portfolio. In fact, I would love to see at least 66% of our portfolio rotated into the lowest 20% Price/Cash Flow REITS with yields over 10%.

      The high expectation stuff with high Price/Cash Flow ratios tends to disappoint (big price drops) and then adds insult to injury with a stingy yield (overpriced). With current price overreactions, there are plenty of great opportunities to accumulate REIT cash flows at deep relative discounts.

      Went to the store today and noticed that many food items were recently marked up between 10% to 30%!!! With our money supply growth rates at the highest levels since the 1970s, further monetary easing with a falling dollar does not bode well for future inflation rates. The only hard asset that pays regular dividends that can keep up with the REAL inflation rate and is not overvalued seems to be commercial real estate. Residential real estate is dead IMO for at least the next six to eight years. Banks will eventually see commercial real estate as one of the few viable games left in town - love those steady/growing cash flows.

      Some believe the falling dollar is good since it makes our exports more attractive. However, the falling dollar is making our imports more expensive, giving American companies greater leverage to raise our prices. Additionally, a falling dollar gives our domestic manufactures a greater incentive to sell production overseas to chase appreciating currencies, leaving us with a shortage. We are a predominantly service based economy, a bump in exports from a falling dollar will likely be insignificant. However, rising inflation (falling standard of living) from our exploding money supply, will be very significant.

      Gold has had a nice run, but I can not see myself buying and selling gold bullions to pay for my groceries ;)

4.87+0.02(+0.41%)Jul 29 4:03 PMEDT