I think HIW made a significant and somewhat short sighted mistake in leaving Jacksonville a couple of years ago. Their strategy in sticking with the mid sized sun belt cities seemed to hold more long term promise to me than being just another relatively small player in Atlanta.
Read this and you might agree:
I agree Highwoods is a decent equity, but a couple of years ago I felt Mortgge reits were of greater potential.I sold HIW and bought IMH and AHR. The rest is of course history with 60 to 90% ups over the two years including the "steamy" dividends.
I think there is still money to be made with dividend increases still coming on AHR and IMH.
You know we don't know yet what red flags should be used for the reits of the modern era. Most of these reits came out after 94. All previous generations of reits were overlevered and undisciplined in their zeal to develop develop develop. Buy Buy Buy.
So far, the vast majority of office reits have ridden the storm out. BofA put out an overweight on office reits recently believing we have hit bottom. Now we are not going right back up but if we are at bottom and we have more or less seen the worst in this cycle then it appears the major office reits will by in large hold their dividends.
The test will be thru the next cycle. Will these mgmt teams show the same discipline thru a cycle that will be much weaker than the last cycle. I will be watching and listening to these mgmt teams talk about their respective parts of the US and prospects before, during, and toward the end of the next recovery from trough to peak to trough.
The healthcare reits are nnn so they can payout more than 85%. The watch there is medicare and medical spending which will be crimped this coming year and next. I don't think it will be as bad as is being projected into healthcare reits at this time. I'm assuming that the uncertainties of today are negatively impacting the reit world because the prospects for economic recovery keep getting pushed out.
Ferdiefor wrote: 'I have achieved my successes more out of adversity and overcoming it.'
Good advice for tough times, BUT -- what are the red flags for REITs? When do you bail out?
So far, the red flags I have gathered are:
(1) When dividend payments exceed 85% of FFO (which should happen before dividend payments fall - also a possible red flag)
(2) When debt to equity exceeds 65%
(3) When outstanding stock options gets close to 5% of outstanding stock.
And even those red flags have exceptions. My best red flag is nebulous - when the one paragraph summary of why I want to own this stock stops making sense.
[Example of that rational for HIW: high dividends at an acceptable risk, succesful company that can weather the economic storm for 2 years, a sector (Office) that I need in my portfolio, will sell after another office REIT becomes noticably more attractive - and that is not presently close to happening]
I hope your input can help me refine and add to the above list.
Long term will go well beyond this terrible cycle in the marketplace. I'm down big on MHX and breakeven on HIW. Long term investing isn't about any particular economic cycle. I don't need any principal from any investment anytime soon.
The key is to be positioned to weather storms like these. I received significant dividends for years before MHX went down. I can now see a road for recovery of value over a longer term timeframe. I continue to receive dividends from HIW.
You are little more than a flip little poster who thinks you actually know what the essence and core of long term investing. Actually you don't really care because you think you are smarter by a 1/2.
It takes a lot of moxy to hang tough in stocks that look like they are on death's door. I have done it time and again and been very successful in choosing correctly. All the elements of recovery are out there for MHX but it will take time. You can wait and watch and ridicule all you want but I have achieved my successes more out of adversity and overcoming it.
Long term reit investors do not fret over short term trends. Long term reit investors pick up their dividends and ride out the ups and downs in real estate cycle.
You have no clue of the best course of action for individual reit investors. If you choose to trade in and out to make money fine but many of us buy and hold for the income stream letting the LONG TERM capital appreciation take care of itself.
I never touted MHX in the high teens.
At the time it was believed the dividend would be restored to an annual $1.30/share and the stock price was reflecting and the economy was looking to be turning at that point.
MHX is not in deep voodoo if you took the time to listen to the cc. The market is selling out of MHX because it is dead money for all of 03 to be sure. The fact is that a look at institutional ownership shows that big players are moving into MHX as a value play. I suggest you go look at who has bought big into MHX in q4 on the MSNBC site. MHX is over almost 80% owned by institutions at this point up from the 60s.
Those willing to wait this mess out will recover in MHX IMHO. Those that have to have rates of return every week will sell out in frustration. That's OK but do not say I was out there saying to buy MHX in the high teens. Those that know my posts know I do not put out buy or sell calls but go thru the analysis. We were all wrong about just how badly the economy would turn down in the travel segment and we all paid a price. Those that are willing to hang into MHX will see better times ahead. Its tough but I believe it will be seen. The beginnings of it show up in MHX's q4 release if you look closely.
Unfortunately if too many pay too much for ppties in markets whose underpinnings are challenged by changes in the macro economy a market previously thought viable becomes no longer viable.
The research triangle in NC was THe place to be for telecom. Telecom is in a depression right now and tons of space are now available in the research triangle. It will take quite sometime to absorb that space. HIW is feeling the pain of that.
WCOM's home became a hot office market as WCOMs growth fueled the entry of businesses to support WCOM's global reach. Now that market is dead.
South NJ markets where telecom was bigtime are now dead markets.
Jacksonville was one of these markets. What you normally want are CBDs where there is a long strong base of businesses that while affected by changes in the economy are not completely wiped out by changes in the economy.
If LA with its diverse economy is seeing challenges in its office markets imagine markets where the core was built on newer companies in telecom and tech that are found not to be viable long term businesses.
it's not a MHX situation - there's no real liquidity issue here
the only issue here is that there will be years before you can see any real growth. the construction in the 2nd tier southern cities goes on even when there's no real market
these "good 'ol southern boys" love to build, are willing to accept
IMO recent high volume of sales are an indication mgmt is on right track.They` re selling at prices that make sense when consideration is given to the low cap rates caused by excessive valuations.Look for more sales if the disconnect continues between rent and valuations
"these are cities with very low barriers to entry"
Now there's something original. Seems like the last time I heard that tired old argument was when ferdie was touting MHX in the high teens (now $4 and in deep doodoo).
Barriers to entry are only ONE! factor among many. The economy of the area, cost of doing business and a few more are of great importance also.