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American Capital Agency Corp. Message Board

  • dr_klumps dr_klumps Aug 26, 2013 3:19 PM Flag

    I am the only SURVIVOR of the 1970's REIT Bust !

    I don't believe anyone even remembers. But I survived and made more from the tax losses than the original investors did here in Chicago. Continental Bank sponsored this REIT, which went BK 1979. The bank didn't do that well either, they went under in 1986 from the Oil Patch Bust.

    IN 1979, the Chase Manhattan Bank had a disaster on its hands. Its Chase Manhattan Mortgage and Realty Trust Company, the biggest of the ill-fated real estate investment trusts, was forced into bankruptcy after many of its $1 billion in construction and development loans had gone sour. It was one of the darkest moments for the nation's third-largest bank. Along with many other banks, Chase lost millions of dollars before the whole affair was over and, since its name was attached to the REIT, the failure inevitably sullied the bank's reputation as well.

    The Chase REIT was not the only one to fail in the troubled years that began in the early 1970's. Dozens of the trusts -designed to allow small investors to pool their money and compete with large investors in the real estate market - teetered on insolvency and nine finally went bankrupt. Stock prices of all REIT's plummeted more than 85 percent in just one year's time between 1973 and 1974, as investors fled in disgust. But Chase was the biggest REIT, and its failure sent tremors through an industry already wracked with multimillion-dollar losses.

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    • Bozo more likely you are a survivor of a botched abortion, raised in a dumpster.

    • What's the matter, did you not cover last Monday?

    • Here is the ones that really profited for decades from the tax loss carryover, remember the leverage 10 to 1, you got 10 times more loss, how could you loose with a bankrupt REIT, one dollar was turned into $10 of losses, if you are in the 39% tax bracked Federal and 5% tax bracket State, you save 44% of $10 or $4.40 on your original $1 invested, but shareholders didn't get it, it was the shrewed guys who bought Triton Group up at the BK auction for pennies.

      These troubles, however, are over. The Chase REIT
      emerged from bankruptcy in May 1980 as the Triton Group Ltd., a bank spinoff
      that is no longer operating as a real estate investment trust, but as an
      independent publicly held company. Blessed with a legacy of about $160 million
      in tax losses from its REIT debacle, Triton is looking for acquisitions and will
      be exempt from paying taxes on any profits for the next 15 years. Triton, which carries the name of one of the Greek sea gods, isn't the only survivor from the mid-1970's collapse in the REIT industry,
      perhaps one of the most serious debacles in modern corporate finance. Some
      REIT's, like Triton, have been transformed into independent companies, and many
      of these are not even involved in real estate anymore. Other REIT's remain
      intact after weathering a virtual depression in the housing industry over the
      last seven years. Now, with interest rates falling and housing stirring once
      again, the old REIT's - plus a bevy of new ones - are finding that investors are
      beginning to look upon them more kindly. Will history repeat, I think so, people over time forget and the same cycle repeats and repeats an the really shrewd people become billionaires.

      • 1 Reply to dr_klumps
      • Investing in Bankrupt REIT's is where the money is at. Form a syndicate, get a lawyer and write up a business plan and go to the bankruptcy auctions. This bubble is over $400 billion. In 1970 it was only $20 billion and it was in commercial real estate mostly which is alot better than $100 million pools of "To Be Announced" individual residential mortgages, this is going to make the current bubble look like Armagaedon compared to the 1970's.

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