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Cohen & Steers Quality Income R Message Board

  • stuey7181 stuey7181 Nov 11, 2009 10:44 AM Flag

    Second Shoe to Drop

    Any concerns on the board about the "second shoe to drop" in the commercial property market? Occassionally I'll hear some talk, just wondering if you all have any thoughts.


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    • Maybe, maybe not. IMO:
      1. A whole lot of any CRE crash has already been factored into the price of stocks like RQI, RPF, and RLF over the past 2 years. This CRE crash has been predicted for more than a year, it’s old news. Any crash might already be price in and expected.
      2. The expected crash is basically triggered by a refinance crunch. Public REITs, which is what RQI et al invest in, should have the best access to liquidity. Point is, CRE may take a hit, but public REITS might profit, not lose, from that hit.
      3. The expected refinancing crunch is basically a liquidity crunch 1 to 2 years out. Fed/Treas might intervene in that time frame, or the credit situation may have improved substantially, or not. I don’t think the govt will standby and watch the economy take another big hit, I think they will do something to facilitate refinancing.

      The above notwithstanding, if there is a CRE crash I expect RQI et all to participate, to some extent. JMO.

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