Most of you probably heard on the news that rents and vacancies in the commercial real estate market have stabilized resulting in a nice move yesterday in most reits.
For 2 yrs. analysts (Karen Finnerman in particular) have pounded bbt because of their exposure to other commercial real estate portfolio (makes up about 13% of total loans) even though most of it was incoming producing. This part of the portfolio has performed exceptional well.
As a result, imo, bbt should be receiving upgrades in the near term. Net adc portfolio is now down to $6.1 billion and imo, most of the weak builders and developers have been flushed out so I look for marked improvement by end of 09. Also, I think bbt will be selling alot of adc reos in second half of 09 and 16% mark down being run through noninterest expense will be substantially less vs. last qtr.
My prediction still is that bbt loan loss provision will swing to the other side of the pendulum in 2010 which will result in some wild changes in earnings.
your comment was misplaced, oh clever one. In the world of real estate there is commercial, residential, etc. There is no definition that means commercial is profitable and unprofitable business loans are something else. Go short BBT if you like. The original post has merit.
norm doesn't know what he is talking about -- he reads the news as his soul source of research, never once had he called any of the REIT properties and find out the story from the horse's mouth -- and to prove that my research will be correct, i have added on the highs of the REIT stocks today to the short position that i am building
unless the consumer finds new sources of money, which they won't, then they are doomed, as well as the REITs
It sound to me like they're thrilled about their business:
"Core business fundamentals were affected by the difficult economic environment during the first six months of 2009. Regional mall comparable sales per square foot, or psf, declined 10.5% during the first six months of 2009 to $442 psf from $494 psf for the same period in 2008. However, our regional mall average base rents increased 3.8% to $40.29 psf as of June 30, 2009, from $38.81 psf as of June 30, 2008 due to releasing of space at higher rents. We were able to lease available square feet at higher rents than the expiring rental rates in the regional mall portfolio resulting in a leasing spread of $6.27 psf as of June 30, 2009, representing a 17.0% increase over expiring rents. Regional mall occupancy was 90.9% as of June 30, 2009, as compared to 91.8% as of June 30, 2008 driven by higher bankruptcies and lease terminations."
They are a particular animal with mostly regional malls (national branded companies). Even at that, a .8% decrease in occupancy is an increase probably around 1.5 million square feet of vacant space. Also they are showing average base rents which normally have some kind of built in yealy increases. They also indicate comparable sales per square foot declined 10% year over year. If they have additional rent based on sales which is not that uncommon, then increases in total rents could very well be less than increases in base rents.
If you think these results are a ringing endorsement of stabilization in the general commercial real estate market then you might want to go to your local strip mall and tell them how great things are. I'm sure they would agree. Good luck.
i still think the REITs still have a little more to go up -- and i will use that rally to get another scale in short on the REITs -- also see my new thoughts on the S&P 500 on other message thread
Bernanke said they would cross that bridge when we get to it -- ok, so let's stand in front of the bridge now and ask what to do
the dropping dollar may be their plan -- think about it -- what would that force as the their next move
getting rather interesting, yeah? -- luckily, i have that answer too, but it won't work for them -- it's all false hope and promise that can't be delivered -- we're doomed -- but luckily, we can make money off those next moves, so short the next crash, especially REITs, then the market should finally bottom, and buy it -- also have in your portfolio the previous investments we have spoken of in prior postings
unless the consumer finds new sources of money, which they won't, then they are doomed
The housing ATM is gone. Credit cards are maxed out. The government will soon be totally tapped out unless they want the dollar to go to zero. Good luck on finding new sources of money.