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Some discussion of potential higher rates having an effect, but as I noted in another thread, was a good article on seekingalpha discussing how some interest rate sensitive fixed income wasn't really all that moved. The article noted that REITs (and utilities) were overdone to the upside and I'd agree with that strongly - as I've noted on this board many times recently - you were going to get a pullback in REITs and that they were overbought (or way overbought.) I think it was entirely a reach for yield.
I definitely think there is more downside for some names that I follow. I own a number of real estate companies, although not all are "straight up" REITs.
My post from another thread:
"I've been staying that REITs will pull back and you're getting what may be the start of that. I don't think that I will be adding any new positions in terms of real estate, as I've been adding to real estate plays that have not gotten the same coverage or are not REITs or are unique in some other manner (CLNY/Colony Financial, HHC/Howard Hughes, BPY/Brookfield Property, KW/Kennedy Wilson) that haven't taken off to the same degree that many of the straight up REITs have.
CLNY (which is sort of a REIT hybrid) is merging with its parent this year (http://www.bloomberg.com/news/articles/2014-11-05/barrack-s-colony-units-to-combine-under-colony-financial), HHC (which is real estate but does not offer a dividend and is not a REIT) was wrecked (at least until recently) because of a view that it was exposed to oil (it is, but not nearly as badly as I think people thought) and BPY is an MLP that is a fascinating and giant/complex real estate vehicle still trading below book, despite a pretty decent move in recent months.
Kennedy Wilson (KW) is a unique little vertically integrated real estate company, complete with real estate services (property management, auctions and more) as well as diversified global real estate investments. It's an interesting, very opportunistic little global company that gets not much coverage but has a substantial investment from famed Canadian investor Prem Watsa of Fairfax (11.1M convertible pfds.)
The one that I thought about a few weeks ago and regret missing is Texas Pacific Land Trust (TPL).
STWD is another holding, which I like due to skilled management and the fact that many of their loans are floating rate. The company has discussed in the recent past that rising rates will be a positive to their bottom line. Of course, the market will just throw it out anyways because it's real estate.
Also, I have real estate exposure elsewhere in other REITs and things like Blackstone, Oaktree, Jardine, Hutchison and other companies."
"With that said, selected market segments took Friday's decline disproportionately on the chin. Leading on the downside within the U.S. stock market were those categories that would likely be most sensitive to the potential for increased interest rates in the coming months. This includes utilities (NYSEARCA:XLU) and REITs (NYSEARCA:VNQ), which despite their traditionally defensive characteristics in down markets declined on Friday by a jarring -3.00% and -3.32%, respectively. One could naturally conclude that these declines were in direct response to the potential for rising rates. But if this was the case, why then did other highly interest rate sensitive categories such as high yield bonds (NYSEARCA:HYG), senior loans (NYSEARCA:BKLN) and preferreds (NYSEARCA:PFF) hold up considerably better with declines of just -0.64%, -0.17% and -0.90%, respectively? Thus, a closer inspection of exactly why utilities and REITs were down so severely is warranted.
In the case of utilities and REITs, both are categories that had gotten way ahead of themselves in recent months."
Article then goes on to provide charts and other discussion. Worthwhile viewing."
The real estate fund that I own FRINX usually performs better than it’s category average during market declines. On a TTM basis it has a yield of about 4.5% and has placed in the top 20% within its category for the past thirty days.
I have provided a link for those that would like to have a look.
Maybe ask why REITs went UP so much in the past year --20% --- much of it by investors desperate for yield, and trend-following.
If (when) rates move up, bonds will be more competitive for capital, and capital will flow out of REITs; and utilities. -- and of course, borrowing costs will go up too -- What goes up, will come down.
Comments
I definitely think there is more downside for some names that I follow. I own a number of real estate companies, although not all are "straight up" REITs.
My post from another thread:
"I've been staying that REITs will pull back and you're getting what may be the start of that. I don't think that I will be adding any new positions in terms of real estate, as I've been adding to real estate plays that have not gotten the same coverage or are not REITs or are unique in some other manner (CLNY/Colony Financial, HHC/Howard Hughes, BPY/Brookfield Property, KW/Kennedy Wilson) that haven't taken off to the same degree that many of the straight up REITs have.
CLNY (which is sort of a REIT hybrid) is merging with its parent this year (http://www.bloomberg.com/news/articles/2014-11-05/barrack-s-colony-units-to-combine-under-colony-financial), HHC (which is real estate but does not offer a dividend and is not a REIT) was wrecked (at least until recently) because of a view that it was exposed to oil (it is, but not nearly as badly as I think people thought) and BPY is an MLP that is a fascinating and giant/complex real estate vehicle still trading below book, despite a pretty decent move in recent months.
Kennedy Wilson (KW) is a unique little vertically integrated real estate company, complete with real estate services (property management, auctions and more) as well as diversified global real estate investments. It's an interesting, very opportunistic little global company that gets not much coverage but has a substantial investment from famed Canadian investor Prem Watsa of Fairfax (11.1M convertible pfds.)
The one that I thought about a few weeks ago and regret missing is Texas Pacific Land Trust (TPL).
STWD is another holding, which I like due to skilled management and the fact that many of their loans are floating rate. The company has discussed in the recent past that rising rates will be a positive to their bottom line. Of course, the market will just throw it out anyways because it's real estate.
Also, I have real estate exposure elsewhere in other REITs and things like Blackstone, Oaktree, Jardine, Hutchison and other companies."
-------------------------------------------
Also:
"http://seekingalpha.com/article/2981816-fridays-sell-off-assessing-the-damage-and-opportunities
"With that said, selected market segments took Friday's decline disproportionately on the chin. Leading on the downside within the U.S. stock market were those categories that would likely be most sensitive to the potential for increased interest rates in the coming months. This includes utilities (NYSEARCA:XLU) and REITs (NYSEARCA:VNQ), which despite their traditionally defensive characteristics in down markets declined on Friday by a jarring -3.00% and -3.32%, respectively. One could naturally conclude that these declines were in direct response to the potential for rising rates. But if this was the case, why then did other highly interest rate sensitive categories such as high yield bonds (NYSEARCA:HYG), senior loans (NYSEARCA:BKLN) and preferreds (NYSEARCA:PFF) hold up considerably better with declines of just -0.64%, -0.17% and -0.90%, respectively? Thus, a closer inspection of exactly why utilities and REITs were down so severely is warranted.
In the case of utilities and REITs, both are categories that had gotten way ahead of themselves in recent months."
Article then goes on to provide charts and other discussion. Worthwhile viewing."
I have provided a link for those that would like to have a look.
http://quotes.morningstar.com/fund/frinx/f?t=frinx
Old_Skeet
Regards,
Ted
http://www.mutualfundobserver.com/discuss/discussion/19495/big-winners-and-losers-in-the-markets-yesterday#latest
If (when) rates move up, bonds will be more competitive for capital, and capital will flow out of REITs; and utilities. -- and of course, borrowing costs will go up too -- What goes up, will come down.
FSRVX (all U.S.) +.82%
FIREX (all int'l.) -.94%
Looks like your fund split the difference.