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Alliancebernstein Income Fund Message Board

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  • dreedva dreedva Aug 22, 2004 10:05 PM Flag

    REIT's

    REITs and REIT CEFs are not for everyone. I've invested in REITs successfully for years. I measure success in terms of reasonable current income (6-8%) and moderate capital growth (2-5%). Not flashy. But it's a return I can live with.

    This Spring was not my worst hit in REITs. Back in 2000, a number of my holdings took 20-30% hits. That does get one's attention. But, they have more than recovered--more than I can say for CSCO, INTC, SUNW, HPQ, LU, etc.

    It was this year that I elected to diversify within the REIT universe by moving exclusively to CEFs. The monthly distribution played an important role since I'm retired. But, again, April wasn't pretty. So far distributions have been maintained, so I just live with the price fluctuations.

    C&S has a good record of maintaining their managed distribution without an on-going reduction in NAV. (Leveraged bond funds have a less stellar record. ACG which I don't currently hold has reduced their distribution twice since I first held them. And their share price and NAV have deteriorated over the past several years. BKT which I do hold has held a little more steady on the distribution, but has lost share price and NAV since inception.)

    The vast majority of C&S holdings are similar among their funds, with little exposure to Mortgage REITS. It is my opinion that this portfolio approach (mostly equity REITs) will produce smaller income streams in the short term, but reduce exposure to wide swings in price. If you look at their holdings, you know that they really need favorable interest rates to leverage such that they can sustain their 8% distribution. The holdings don't yield that much.

    FWIW I did very well in IMH. I sold too soon, but made well over 100% total return over a two year period.

    It is my opinion that if our economy recovers and stays strong, REITs and REIT CEFs will share in the wealth. If the economy falters, I think REITs will provide a better cushion against large losses. But, the jury's out on that.

    Phage and Captain are obviously the guys to follow if you're interested in the current state of market and economic affairs from a technical or fundamental stand point.

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    • "This Spring was not my worst hit in REITs. Back in 2000, a number of my holdings took 20-30% hits. That does get one's attention. But, they have more than recovered--more than I can say for CSCO, INTC, SUNW, HPQ, LU, etc......."

      good one....I can't wait to hear John Chambers of Cisco or some tech analysts say "now's the time to buy tech.....the monsoon season's over".........

 
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