Does anyone work at one of the PE backed public REITs? Any thoughts on the current situation where values are dropping due to liquidity / debt roll-over fears?
I'm looking at REITs sponsored by BX, KKR, Starwood; all are dropping big time, but there is not a lot of granular insight on how they will solve their problems.. my understanding is this is all related to debt maturities coming up, however, these REITs have large balance sheets, ability to borrow against assets, and assets that are floating right...
any thoughts from someone on the inside of this industry?
I assume you are talking about public non traded mREITS vs an Arbor, Ladder, etc. Is that correct?
No, all 3 of the above are publicly traded
Yes they are. Exchange vs non exchange traded mREITS operate very differently, and based on your post I am assuming you are looking for intel on non trades traded REITs. Is that accurate?
I'm looking at STWD, KREF, and BXMT specifically. Do you have exp valuing or investing in this space?
Any RE pro can read the data and come up with rough values on their assets and business model at the RE level, but I am curious as to how they are valued as mREITs and what is driving their share prices to get crushed.
Commissions and feesI'm looking at STWD, KREF, and BXMT specifically. Do you have exp valuing or investing in this space?Any RE pro can read the data and come up with rough values on their assets and business model at the RE level, but I am curious as to how they are valued as mREITs and what is driving their share prices to get crushed. I have some experience investing in this space, but generally look at them as trades over investments. When markets rebound or there is a thematic trade like the fed backing of mbs like we have seen recently I keep my eye on these. mREITS attract retail buyers because of their high dividends. To achieve these dividends they tend to run at max leverage which means they are forced to sell when the market declines due to margin calls. Conversely they issue bonds and fresh shares when prices are high. Think of them as buy high sell low strategies. There is a fantastic Harley Bassman note on his site Convexity Maven from a few months back that covers mREITS in extreme detail.
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LOL, thank you for the laugh
Interesting article on the subject:
https://seekingalpha.com/article/4587609-mort-2-headwinds-facing-mortga…
Interesting, thanks for sharing.
Article explains they should continue to decrease in value bc of shrinking demand for their debt (the Fed reducing their purchases).. I'm interested in understanding if this presents a danger to their overall business model, like a bankruptcy or wipe out of the equity.
IMO the issues that the article highlight are more relevant to MRIETs that focus on residential loans (Annaly/AGNC) opposed to commercial players (BXMT/STWD/etc.). I think the larger worry for the commercial MREITs is lack of leverage from banks (via warehouse financing/a note sales/etc.), which is almost certainly being negatively impacted by the overall banking meltdown (and has been an issue over the last 6-12 months).
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