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ProShares UltraShort Real Estate Message Board

  • investing_rules investing_rules May 15, 2009 10:40 PM Flag

    Question for Serious Investors - Please

    Is this one of the better funds to catch the Commercial Real Estate drop?

    Please serious answers only.

    Just started researching possible short funds to help catch some of the possible returns. GM and Chrysler dumping all those dealerships could be just enough to tip the market over and force the next hammer on the banks. JMHO

    So any suggestions? Thanks in advance!

    gl

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    • Take a look at IYR and you'll see how far CRE has already dropped. Like most retail investors, you're a little late to the game. Some REIT's are relatively strong and have issued equity to solve their debt problems and have not been punished because they have already fallen so far. Others will fall also, but CRE problems are well known and weak ones are trading for bankruptcy. IMO, this is now a play on the economy - if you believe in Obomanomics, then REIT's will survive and this trade is over for anyone but day traders playing volatility. If you believe many corrections still need to play out and we're in this for 2-3 more years, then IYR could fall again and sRS will give you some good gains. Final consideration is the daily reset - easier to lose than gain the losses back.

      • 2 Replies to stk_wchr
      • So true. As someone that has gotten hammered by SRS, I want to say that this is ONLY a day or two trading vehicle. Cut your losses and take your gains. That is the only smart way to play this POS. Ugly, but you can make money. You just have to have incredible timing.

      • Thanks for the insight. I know some have filed bankruptcy but it seems to me there are more to play out. So yes I do think it will be a long recovery.

        Here is one article I came across:
        Real estate index rises along with delinquencies
        4:28p ET May 8, 2009 (MarketWatch)
        NEW YORK (MarketWatch) -- The stock market has for weeks been dogged by talk of trouble lurking in commercial real estate, yet an exchange-traded fund of commercial property companies has rallied 50% in the last two months -- despite commercial mortgage delinquencies hitting 11-year highs in April.

        Delinquencies are up "by a factor of five from a year ago. Even though commercial real estate lags the cycle, the numbers highlight the battle banks face in producing profits," said Nick Kalivas, equity analyst at MF Global Research.

        Property research firm Trepp LLC on Thursday reported the level of loans 30 days or more behind in payments last month climbed to 2.45%, with the credit squeeze making it hard for landlords to refinance bank loans.

        "We're very concerned about commercial real estate," said Bill Feingold, managing director at Newport Value Partners. He believes the stock market has gotten ahead of itself, rallying on earnings from banks and other companies that stem from cost cuts as opposed to growth.

        On Friday, financial shares paced strong gains after the Labor Department reported job losses slowed in April. See Economic Report. The Dow Jones Industrial Average was up 164.80 points, or 2%, to stand at 8,574.65, giving the blue chips a weekly gain of 4.4%. The S&P 500 added 21.84 points, or 2.4%, to 929.23, which translates into a 5.9% rise from the week-ago close. The Nasdaq Composite advanced 20.76 points, or 1.3%, to 1,739.00, up 1.2% for the week.

        Also rallying, the Dow Jones U.S. Real Estate Index rose 6.8% to 34.81, up nearly 57% from its March 6 close of 22.21. In the same time, the S&P 500 has gained 39% from its March 6 low.

        Capital needs

        The index's components include Simon Property Group Inc. , the nation's largest mall owner and biggest publicly traded U.S. real estate company.

        Simon Property on Wednesday said it would sell $800 million in new stock, its second foray into the equity markets in less than two months, illustrating its need for capital.

        Shares of Simon Property on Friday gained 2.8%. The company earlier this month reported first-quarter earnings rose 14% amid higher rents, although occupancy rates weakened as retailers hit by declining sales posed difficulties for mall landlords, some of whom are saddled with large debt.

        One case in point is Simon Property rival General Growth Properties Inc. , which last month filed for bankruptcy protection as the Las Vegas developer and shopping mall owner struggles to restructure $27 billion in debt. Read more.

        Once one of the most highly valued REITs [Real Estate Investment Trusts] in the market, Nasdaq has since suspended trade of General Growth Properties' stock, which in recent weeks dived under one penny. A year-ago, its stock priced at $42.00 a share.

        One of the key stand-outs in the most recent Senior Loan Officer Survey is "the extent to which demand for commercial real estate loans has collapsed," Merrill Lynch & Co. Inc. analysts Drew Matus and David Rosenberg wrote in a Tuesday note.

        The net percentage of banks reporting weaker demand for commercial real estate jumped to 66% in the second quarter from 55% in the first quarter in what the analysts called the weakest showing on record.

        "Meanwhile, the majority of banks continue to tighten their lending standards on commercial real estate loans. Fully 66% of banks tightened standards and, though that is marginally better than the 79% in Q1, this tells us that we can expect continued declines in commercial construction the quarters ahead," Matus and Rosenberg said.

    • Trust me, its not an investment, imho. Its a traders vehicle. I don't know what you can play, perhaps shorting a basketful of overbought REITS that I'm sure many here could provide, but I would stay away from this. I truly think its a scam.

 
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