REITS are great investments when they yeilded above 6% but now they are just plain overvalued. They are ripe for the pickin.
I am short 1,000,000. worth of REITS and am down about 60k..
I am beginning to get impatient and I think of the saying, "markets can remain irrational longet than you can remain solvent"
All I see is up up up with no end in sight..Is everyone crazy?
I am holding my short postiiton as long as I can stand it but I don't know how much longer that will be.
someone please help me feel better about what i am doing!!!!
the reits I shorted we option assignments..
you see, I sold january naked calls in the summer, and for a while I was way up (in hindsight I should have bought to cover in October). but then into the new year these reits went skyward levaing me with shorted exersizable options)
When the calls required me to sell, I did not want to buy the stock back, so I shorted it to my dismay.
The other names you mention ar not optionble except one.
I think all your aftormentioned stcoks also make good shorts, and I will look to do so as soon as I get some afformation that retail reits are headed south as they should be.
right now, I feel like I am swimming against the tide, but hell, even a broken clock is right twice a day.
I'm sure the day will come when I stick my tail between my legs and cover these positions, and the day after the stocks will tank!
thecoldeye_98 wrote: "Correct me if I'm wrong, but isn't DDR's pay out percentage is modest?"
Compared to the fellow REITs in the retail non-mall sector which also are not triple-net REITs, DDR payout percentage is roughly in line with the rest of the sector - using the 'percentage' as dividend/FFO. Sample percentages of Q4 Div/ 2006 est FFO:
Those stats are for January ending - using prices and FFO estimates from that date. I am two days away from posting the Feb ending numbers. And Q4 CC's may have changed those FFO estimates.
Coldeye - you are correct in that DDR [and the rest of the retail sector] do have low payout percentages compared to some of the other sectors within REITs. REITs in the Office, Industrial and Hospitality sectors are also low. Apartment, Health Care and Triple-Nets are noticably higher in payout percentage.
Coldeye wrote: [the low payout percentage] is "In effect, a pile of spare ammo to keep the div increases going even if they have a bad year or two. This will help defend the stock price."
That statement is logical, but I have not seen any data that supports that premise. In fact, REITs with a low payout percentage MAY be using the retained earnings to assist in funding expansion/development. And that in turn could lead to even greater stock price volatility.
Banks also vary a good bit in their payout percentages [Div/EPS], and I have not noticed that this ratio effects volatility. But then again, I have not measured that attribute - in any sector. So I will call on others to give witness to this interesting theory.
Correct me if I'm wrong (I'm a real estate guy, not a REIT guy), but isn't it fair to say that (in addition to the points you made) DDR's pay out percentage is modest? In effect, DDR has a pile of spare ammo to keep the div increases going even if they have a bad year or two. This will help defend the stock price. I'm no genius, but it seems to me that there are better short candidates than DDR.
I can see some short sales as a hedge technique but your predicament seems too risky. Are you actually betting against a rise in commercial real estate pricing? Are you comfortable paying my dividends? On the bright side, you'll probably get a chance to exit your position to break-even in March. Reit dips are what big buyers wait for so I'd act fast during the next 6% dip.