Best of the Week
Most Popular
1. US Housing Market House Prices Bull Market Trend Current State - Nadeem_Walayat
2.Gold and Silver End of Week Technical, CoT and Fundamental Status - Gary_Tanashian
3.Stock Market Dow Trend Forecast - April Update - Nadeem_Walayat
4.When Will the Stock Market’s Rally Stop? - Troy_Bombardia
5.Russia and China Intend to Drain the West of Its Gold - MoneyMetals
6.BAIDU (BIDU) - Top 10 Artificial Intelligence Stocks Investing To Profit from AI Mega-trend - Nadeem_Walayat
7.Stop Feeding the Chinese Empire - ‘Belt and Road’ Trojan Horse - Richard_Mills
8.Stock Market US China Trade War Panic! Trend Forecast May 2019 Update - Nadeem_Walayat
9.US China Trade Impasse Threatens US Lithium, Rare Earth Imports - Richard_Mills
10.How to Invest in AI Stocks to Profit from the Machine Intelligence Mega-trend - Nadeem_Walayat
Last 7 days
Eye Opening Currency Charts – Why Precious Metals Are Falling - 23rd May 19
Netflix Has 175 Days Left to Pull Off a Miracle… or It’s All Over - 23rd May 19
Capitalism Works, Ravenous Capitalism Doesn’t - 23rd May 19
The Euro Is Bidding Its Time: A Reversal at Hand? - 23rd May 19
Gold Demand Rose 7% in Q1 2019. A Launching Pad Higher for Gold? - 23rd May 19
Global Economic Tensions Translate Into Oil Price Volatility - 22nd May 19
The Coming Pension Crisis Is So Big That It’s a Problem for Everyone - 22nd May 19
Crude Oil, Hot Stocks, and Currencies – Markets III - 22nd May 19
The No.1 Energy Stock for 2019 - 22nd May 19
Brexit Party and Lib-Dems Pull Further Away from Labour and Tories in Latest Opinion Polls - 22nd May 19
The Deep State vs Donald Trump - US vs Them Part 2 - 21st May 19
Deep State & Financial Powers Worry about Alternative Currencies - 21st May 19
Gold’s Exciting Boredom - 21st May 19
Trade War Fears Again, Will Stocks Resume the Downtrend? - 21st May 19
Buffett Mistake Costs Him $4.3 Billion This Year—Here’s What Every Investor Can Learn from It - 21st May 19
Dow Stock Market Trend Forecast 2019 May Update - Video - 20th May 19
A Brief History of Financial Entropy - 20th May 19
Gold, MMT, Fiat Money Inflation In France - 20th May 19
WAR - Us versus Them Narrative - 20th May 19
US - Iran War Safe-haven Reasons to Own Gold - 20th May 19
How long does Google have to reference a website? - 20th May 19
Tory Leadership Contest - Will Michael Gove Stab Boris Johnson in the Back Again? - 19th May 19
Stock Market Counter-trend Rally - 19th May 19
Will Stock Market “Sell in May, Go Away” Lead to a Correction… or a Crash? - 19th May 19
US vs. Global Stocks Sector Rotation – What Next? Part 1 - 19th May 19
BrExit Party EarthQuake Could Win it 150 MP's at Next UK General Election! - 18th May 19
Dow Stock Market Trend Forecast 2019 May Update - 18th May 19
US Economy to Die a Traditional Death… Inflation Is Going to Move Higher - 18th May 19
Trump’s Trade War Is Good for These 3 Dividend Stocks - 18th May 19
GDX Gold Mining Stocks Fundamentals Update - 17th May 19
Stock Markets Rally Hard – Is The Volatility Move Over? - 17th May 19
The Use of Technical Analysis for Forex Traders - 17th May 19
Brexit Party Set to Storm EU Parliament Elections - Seats Forecast - 17th May 19
Is the Trade War a Catalyst for Gold? - 17th May 19
This Is a Recession Indicator No One Is Talking About—and It’s Flashing Red - 17th May 19
War! Good or Bad for Stocks? - 17th May 19
How Many Seats Will Brexit Party Win - EU Parliament Elections Forecast 2019 - 16th May 19
It’s Not Technology but the Fed That Is Taking Away Jobs - 16th May 19
Learn to Protect your Forex Trading Capital - 16th May 19
Gold Ratio Charts Offer The Keys to the Bull Market - 16th May 19
Is Someone Secretly Smashing the Stock Market at Night? - 16th May 19

Market Oracle FREE Newsletter

U.S. House Prices Analysis and Trend Forecast 2019 to 2021

Ignore the Crowd … It’s Time to Invest in Commercial Real Estate 2010

Housing-Market / US Housing Jan 08, 2010 - 04:09 AM GMT

By: Money_Morning

Housing-Market

Best Financial Markets Analysis ArticleJon D. Markman writes: Of all the independent institutional research that I receive, some of my favorite comes from Justin Mamis, a veteran of all the financial wars we've seen over the past five decades.


Although he's steadfastly bearish, no matter the climate - like those codgers you see wearing heavy coats on sunny days in Florida - the Canadian analyst has lasted so long because he's quick with colorful phrases, and his research is amusing and insightful.

Just last week, Mamis recounted a conversation he had enjoyed years ago at the table of his new boss, the legendary analyst/historian/portfolio manager Don Coxe: "At dinner, [Coxe] would lean back in his chair in that professorial manner of his and "remind" the guests that the Sanhedrin, the Hebrew Court of Law, had a rule that if every member voted the same way, the decision went the other way," Mamis wrote. "Unanimity had to be misguided."

That story got me thinking: What is one investment theme that the public and/or pros could agree on today?

Of all the independent institutional research that I receive, some of my favorite comes from Justin Mamis, a veteran of all the financial wars we've seen over the past five decades.

Although he's steadfastly bearish, no matter the climate - like those codgers you see wearing heavy coats on sunny days in Florida - the Canadian analyst has lasted so long because he's quick with colorful phrases, and his research is amusing and insightful.

Just last week, Mamis recounted a conversation he had enjoyed years ago at the table of his new boss, the legendary analyst/historian/portfolio manager Don Coxe: "At dinner, [Coxe] would lean back in his chair in that professorial manner of his and "remind" the guests that the Sanhedrin, the Hebrew Court of Law, had a rule that if every member voted the same way, the decision went the other way," Mamis wrote. "Unanimity had to be misguided."

That story got me thinking: What is one investment theme that the public and/or pros could agree on today?

It's a totally subjective question, meaning everyone will have a different answer. But I figured that would be a great "thought exercise" and came up with three statements I'll bet virtually everyone would agree with. They are:

  • U.S. healthcare reform will fail.
  • The U.S. budget is out of control.
  • China will dominate this century.
  • Commercial real estate is still a disaster waiting to happen worldwide.

The odd thing about that last statement is that - across the board - commercial real estate stocks have been among the strongest performers over the past few months. But it's been a very quiet move, generating little in the way of attention.

Coming off a hellacious decline, these stocks are now enjoying solid uptrends. Although not quite as cheap as they were a year ago, these stocks are still well off their highs, and feature still-low valuations. Add in their expected income streams and it's understandable why these stocks are still the "go-to" choices for a lot of fund managers.

These stocks make a lot of sense. Unlike manufacturers who are dependent on hit products and flaky vendors, most real estate owners have long-term contractual obligations that have offered surprising stability in this tough economy. For instance, take SL Green Realty Corp (NYSE: SLG), the largest owner of office real estate in New York.

As you may have heard, that's a city where a lot of too-big-to-fail financial companies reside.

Since real estate is such a capital-intensive industry, it is battered during the sort of capital famine seen last year. But the credit bull market is enabling companies with good collateral to refinance their debts, a transformation that's helped real estate investment trusts (REITs) to raise more than $17 billion since the start of 2009. The REITs have used this infusion to shore up their balance sheets and to acquire properties from less-adroit owners. As part of its recent earnings reports, SL Green has reported that the government's direct aid to banks has directly it to maintain a high occupancy rate and steady rents.

I talked about this a lot in the summer, and will stick to my guns: There's no reason that REITs like SL Green can't get back to their share-price levels of September 2008 at minimum over the next year or two. For SL Green that would require a return to an $85 share price - a 78% return from Wednesday's closing price of $47.70.

The REITs are not yet back to paying the big dividends for which they used to be loved -- which is why oil-and-gas master limited partnerships (MLPs) like our Linn Energy LLC (NASDAQ: LINE) have become so popular. But those REIT payouts will return.

I recognize it's still tough out there for property owners: My office lease in downtown Seattle is up, and the owner offered me twice the space in a better building (with an awesome Puget Sound view) for nearly the same amount I'm paying now - if I agreed to take a longer contract. I'm taking them up on the offer, recognizing that's the kind of deal-making going on now to get the real-estate industry through 2009-2010 rough patch.

But don't get hung up on what's happening now. Investors should be valuing REITs on their prospects for 2011-2012 prospects. For now the vote is that they'll be much better. 

We'll discuss this more as the New Year advances. In the meantime, if you are a commercial property lessor, lesee, broker or developer, I welcome your thoughts.

[Editor's Note: With the U.S. economy picking up steam, there has seldom been a better time to invest. Valuations are low and the potential for profit is extraordinarily high. But picking the right investments is key - and having a guide is crucial. Jon D. Markman should be that guide. Markman, a veteran portfolio manager, commentator and author, is offering investors a unique opportunity to capitalize on the current bull market by subscribing to his Strategic Advantage newsletter. For more articles like the one you just read, or for more information about Markman's Strategic Advantage service, please click here.]

Source: http://moneymorning.com/2010/01/08/commerical-real-estate-investing/

Money Morning/The Money Map Report

©2010 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules