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#5
10-16-2003, 04:05 PM
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 Re: REIT outlook? "darkness" <darkness39[at]yahoo.com> wrote in message news:17f41cc6.0310151248.7dd9f520[at]posting.google.com... - quote - > "Stephen J Fromm" <stephen.fromm[at]nospam.invalid> wrote in message
OK; I'll check it out.news:<B%ajb.28188$Hl2.2027[at]nwrddc01.gnilink.net> ... > > "> > > The quoted stock price is of course not NAV. Where does one find the > > NAV > > > > for a REIT? > > > > > The company will publish an NAV. smartmoney, Barrons or morningstar > > > may publish comparative data. > > > OK. I'll dig. > > > > > > I would say that a yield above comparable corporate bonds, and a > > > > > discount of c. 15-10% for NAV is 'neutral': if discounts fall below > > > > > 10%, that is probably a sell signal, and rise above 25% it is probably > > > > > a buy signal. (you need to check the historic ranges: I could be way > > > > > off on my numbers) > > > > > > > One doc that came up on Google claimed the current premium is 10%, > > historic > > > > is 3.5% (premium, not a discount), but I'm not sure if that should be > > > > trusted. > > > > > Burton Malkiel shows in his book that premiums reached 40% in the > > > early 1990s, and fell to 40% discounts in the 1997 period. So average > > > is not a great measure (underlying too volatile). > > > You mean _A Random Walk Down Wall Street_? IIRC he was referring to > > closed-end funds, but I guess you're claiming that the divergence between > > price and NAV is the same issue in both cases. > No. In the 1998 edition (the 6th I think) he has several pages on > REITs, not CEFs and a nice graph of REIT discounts in the 1990s. > There is a new edition out. - quote - > However, my nascent
Right, typically HY is intermediate term.> > impression is that NAV is much harder to calculate for a REIT (in which case > > the underlying assets are physical capital) than for a closed-end fund (in > > which case the assets are paper). > This is where accounting rules come in. There are well developed ways > of calculating net assets for real estate firms, depending upon 'cap' > rates (capitalised rental income) which auditors sign off on. Of > course, like all accounting standards, there are ways to show higher > and lower NAV. Post Sarbanes-Oxley, I would imagine companies are > leaning towards the conservative ;-). > > > > > > > > > REITs have gone up this year because everyone is chasing yield, which > > > > > I view as a mug's game. I don't know the US property market, but the > > > > > UK one looks very overcooked. As in, go there at your peril. > > > > > > > Right. > > > > > > > Some of my $$ was *already* in REITs, and I was thinking of getting out > > to > > > > "take profits" (then going back in if/when the #s go back down). > > > > > > > > The problem is 'where to put the money'? I don't see any asset > > > > > classes that look cheap at the moment. I am (for the first time) > > > > > getting interested in gold shares (after all, they have only trebled > > > > > ;-) because I am a dollar bear. Euro bonds also look interesting > > > > > (same reason). Things that are starting to look very overvalued are > > > > > tech and emerging markets (and bonds, of course). > > > > > > > Right, you and I discussed this awhile back. I ended up putting about > > 1/6 > > > > of my assets in an international bond fund that doesn't hedge back into > > > > dollars and mainly invests in europe (American Century Int'l Bond, > > IIRC). > > > > > Very short term bonds are the other possibility (say 3 years > > > duration). > > > You mean *domestic*? > Yes. And I agree with you corporate v. government. I missed the high > yield rally but I now believe these have run too far (and they are not > short duration in any case). - quote - > You probably want a fund with duration 3 years: roughly, a 1% rise in
OK. In the past I've liked Vanguard Short-Term Corporate.> interest rates should then lead to a 1% fall in NAV. - quote - > > > Right, I like those because interest rate risk is lower.
They *have* tightened, but my impression is that they're still high by the> > > However, unless things have changed recently, the yields on Treasuries suck > > compared to corporates. (I've long been a fan of the latter.) > The spreads have certainly tightened (greater confidence re economic > recovery). standards of the last couple of decades. - quote - > > > Thanks for your reply---always appreciated,
Thanks; got it. Hope you didn't get hit by the Swen worm like I did.> The yahoo.com email address is almost spammed out. I shall send you > another one. -S - quote - > > > S |
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#4
10-15-2003, 09:49 PM
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| Re: REIT outlook? "Stephen J Fromm" <stephen.fromm[at]nospam.invalid> wrote in message news:<B%ajb.28188$Hl2.2027[at]nwrddc01.gnilink.net> ... - quote - > "> > > The quoted stock price is of course not NAV. Where does one find the
No. In the 1998 edition (the 6th I think) he has several pages on> NAV > > > for a REIT? > > > The company will publish an NAV. smartmoney, Barrons or morningstar > > may publish comparative data. > OK. I'll dig. > > > > I would say that a yield above comparable corporate bonds, and a > > > > discount of c. 15-10% for NAV is 'neutral': if discounts fall below > > > > 10%, that is probably a sell signal, and rise above 25% it is probably > > > > a buy signal. (you need to check the historic ranges: I could be way > > > > off on my numbers) > > > > > One doc that came up on Google claimed the current premium is 10%, > historic > > > is 3.5% (premium, not a discount), but I'm not sure if that should be > > > trusted. > > > Burton Malkiel shows in his book that premiums reached 40% in the > > early 1990s, and fell to 40% discounts in the 1997 period. So average > > is not a great measure (underlying too volatile). > You mean _A Random Walk Down Wall Street_? IIRC he was referring to > closed-end funds, but I guess you're claiming that the divergence between > price and NAV is the same issue in both cases. REITs, not CEFs and a nice graph of REIT discounts in the 1990s. There is a new edition out. However, my nascent - quote - > impression is that NAV is much harder to calculate for a REIT (in which case
This is where accounting rules come in. There are well developed ways> the underlying assets are physical capital) than for a closed-end fund (in > which case the assets are paper). of calculating net assets for real estate firms, depending upon 'cap' rates (capitalised rental income) which auditors sign off on. Of course, like all accounting standards, there are ways to show higher and lower NAV. Post Sarbanes-Oxley, I would imagine companies are leaning towards the conservative ;-). - quote - > > > > > > REITs have gone up this year because everyone is chasing yield, which
Yes. And I agree with you corporate v. government. I missed the high> > > > I view as a mug's game. I don't know the US property market, but the > > > > UK one looks very overcooked. As in, go there at your peril. > > > > > Right. > > > > > Some of my $$ was *already* in REITs, and I was thinking of getting out > to > > > "take profits" (then going back in if/when the #s go back down). > > > > > > The problem is 'where to put the money'? I don't see any asset > > > > classes that look cheap at the moment. I am (for the first time) > > > > getting interested in gold shares (after all, they have only trebled > > > > ;-) because I am a dollar bear. Euro bonds also look interesting > > > > (same reason). Things that are starting to look very overvalued are > > > > tech and emerging markets (and bonds, of course). > > > > > Right, you and I discussed this awhile back. I ended up putting about > 1/6 > > > of my assets in an international bond fund that doesn't hedge back into > > > dollars and mainly invests in europe (American Century Int'l Bond, > IIRC). > > > Very short term bonds are the other possibility (say 3 years > > duration). > You mean *domestic*? yield rally but I now believe these have run too far (and they are not short duration in any case). You probably want a fund with duration 3 years: roughly, a 1% rise in interest rates should then lead to a 1% fall in NAV. - quote - > Right, I like those because interest rate risk is lower.
The spreads have certainly tightened (greater confidence re economic> However, unless things have changed recently, the yields on Treasuries suck > compared to corporates. (I've long been a fan of the latter.) recovery). - quote - > Thanks for your reply---always appreciated,
The yahoo.com email address is almost spammed out. I shall send youanother one. - quote - > S |
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#3
10-15-2003, 01:41 PM
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| Re: REIT outlook? "darkness" <darkness39[at]yahoo.com> wrote in message news:17f41cc6.0310140926.ca904f8[at]posting.google.com... - quote - > "Stephen J Fromm" <stephen.fromm[at]nospam.invalid> wrote in message
OK. I'll dig.news:<AOKib.1424$QQ.175[at]nwrddc03.gnilink.net> ... > > "darkness" <darkness39[at]yahoo.com> wrote in message > > news:17f41cc6.0310092348.1a16779[at]posting.google.com... > > > "Stephen J Fromm" <stephen.fromm[at]nospam.invalid> wrote in message > > news:<5L%fb.16257$3b7.13892[at]nwrddc02.gnilink.net> ... > > > > What's the current outlook for REITs? > > > > > > > I own shares in a mutual fund that invests in REITs. It's appreciated > > quite > > > > a bit this year, and I'm wondering if I should sell. It's hard for me > > to > > > > value it, though---the fund complex and Yahoo give different values for > > the > > > > fund's P/E. > > > > > > > sjfromm > > > > > I think it is accepted that REITs are valued on yield and NAV not PE. > > > > > Historically, discounts have been as low as negative (premiums) to NAV > > > in the boom years, and minus 40% or more in the trough years. > > > The quoted stock price is of course not NAV. Where does one find the NAV > > for a REIT? > The company will publish an NAV. smartmoney, Barrons or morningstar > may publish comparative data. - quote - > > > I would say that a yield above comparable corporate bonds, and a
You mean _A Random Walk Down Wall Street_? IIRC he was referring to> > > discount of c. 15-10% for NAV is 'neutral': if discounts fall below > > > 10%, that is probably a sell signal, and rise above 25% it is probably > > > a buy signal. (you need to check the historic ranges: I could be way > > > off on my numbers) > > > One doc that came up on Google claimed the current premium is 10%, historic > > is 3.5% (premium, not a discount), but I'm not sure if that should be > > trusted. > Burton Malkiel shows in his book that premiums reached 40% in the > early 1990s, and fell to 40% discounts in the 1997 period. So average > is not a great measure (underlying too volatile). closed-end funds, but I guess you're claiming that the divergence between price and NAV is the same issue in both cases. However, my nascent impression is that NAV is much harder to calculate for a REIT (in which case the underlying assets are physical capital) than for a closed-end fund (in which case the assets are paper). - quote - > > > > REITs have gone up this year because everyone is chasing yield, which
You mean *domestic*?> > > I view as a mug's game. I don't know the US property market, but the > > > UK one looks very overcooked. As in, go there at your peril. > > > Right. > > > Some of my $$ was *already* in REITs, and I was thinking of getting out to > > "take profits" (then going back in if/when the #s go back down). > > > > The problem is 'where to put the money'? I don't see any asset > > > classes that look cheap at the moment. I am (for the first time) > > > getting interested in gold shares (after all, they have only trebled > > > ;-) because I am a dollar bear. Euro bonds also look interesting > > > (same reason). Things that are starting to look very overvalued are > > > tech and emerging markets (and bonds, of course). > > > Right, you and I discussed this awhile back. I ended up putting about 1/6 > > of my assets in an international bond fund that doesn't hedge back into > > dollars and mainly invests in europe (American Century Int'l Bond, IIRC). > Very short term bonds are the other possibility (say 3 years > duration). Right, I like those because interest rate risk is lower. However, unless things have changed recently, the yields on Treasuries suck compared to corporates. (I've long been a fan of the latter.) Thanks for your reply---always appreciated, S - quote - > > > > So I am holding more cash than I want to, because I cannot find > > > attractive asset classes. > > > Yeah, I don't think things look that great out there. > > > > If you are an efficient market investor, then you should have a target > > > weighting in REITs (say 10%) and sell down (or buy up) in an annual > > > rebalancing to get to that %age target. > > > Right. > > > Best, > > > S ======================================= MODERATOR'S COMMENT: Request: To make your comments easier to read and to save clutter, please consider trimming the post to which you respond. Thank you. -HWW |
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#2
10-14-2003, 06:27 PM
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| Re: REIT outlook? "Stephen J Fromm" <stephen.fromm[at]nospam.invalid> wrote in message news:<AOKib.1424$QQ.175[at]nwrddc03.gnilink.net> ... - quote - > "darkness" <darkness39[at]yahoo.com> wrote in message
The company will publish an NAV. smartmoney, Barrons or morningstar> news:17f41cc6.0310092348.1a16779[at]posting.google.com... > > "Stephen J Fromm" <stephen.fromm[at]nospam.invalid> wrote in message > news:<5L%fb.16257$3b7.13892[at]nwrddc02.gnilink.net> ... > > > What's the current outlook for REITs? > > > > > I own shares in a mutual fund that invests in REITs. It's appreciated > quite > > > a bit this year, and I'm wondering if I should sell. It's hard for me > to > > > value it, though---the fund complex and Yahoo give different values for > the > > > fund's P/E. > > > > > sjfromm > > > I think it is accepted that REITs are valued on yield and NAV not PE. > > > Historically, discounts have been as low as negative (premiums) to NAV > > in the boom years, and minus 40% or more in the trough years. > The quoted stock price is of course not NAV. Where does one find the NAV > for a REIT? may publish comparative data. - quote - > > I would say that a yield above comparable corporate bonds, and a
Burton Malkiel shows in his book that premiums reached 40% in the> > discount of c. 15-10% for NAV is 'neutral': if discounts fall below > > 10%, that is probably a sell signal, and rise above 25% it is probably > > a buy signal. (you need to check the historic ranges: I could be way > > off on my numbers) > One doc that came up on Google claimed the current premium is 10%, historic > is 3.5% (premium, not a discount), but I'm not sure if that should be > trusted. early 1990s, and fell to 40% discounts in the 1997 period. So average is not a great measure (underlying too volatile). - quote - > > REITs have gone up this year because everyone is chasing yield, which
Very short term bonds are the other possibility (say 3 years> > I view as a mug's game. I don't know the US property market, but the > > UK one looks very overcooked. As in, go there at your peril. > Right. > Some of my $$ was *already* in REITs, and I was thinking of getting out to > "take profits" (then going back in if/when the #s go back down). > > The problem is 'where to put the money'? I don't see any asset > > classes that look cheap at the moment. I am (for the first time) > > getting interested in gold shares (after all, they have only trebled > > ;-) because I am a dollar bear. Euro bonds also look interesting > > (same reason). Things that are starting to look very overvalued are > > tech and emerging markets (and bonds, of course). > Right, you and I discussed this awhile back. I ended up putting about 1/6 > of my assets in an international bond fund that doesn't hedge back into > dollars and mainly invests in europe (American Century Int'l Bond, IIRC). duration). - quote - > > So I am holding more cash than I want to, because I cannot find > > attractive asset classes. > Yeah, I don't think things look that great out there. > > If you are an efficient market investor, then you should have a target > > weighting in REITs (say 10%) and sell down (or buy up) in an annual > > rebalancing to get to that %age target. > Right. > Best, > S |
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#1
10-14-2003, 09:57 AM
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| Re: REIT outlook? "darkness" <darkness39[at]yahoo.com> wrote in message news:17f41cc6.0310092348.1a16779[at]posting.google.com... - quote - > "Stephen J Fromm" <stephen.fromm[at]nospam.invalid> wrote in message
The quoted stock price is of course not NAV. Where does one find the NAVnews:<5L%fb.16257$3b7.13892[at]nwrddc02.gnilink.net> ... > > What's the current outlook for REITs? > > > I own shares in a mutual fund that invests in REITs. It's appreciated quite > > a bit this year, and I'm wondering if I should sell. It's hard for me to > > value it, though---the fund complex and Yahoo give different values for the > > fund's P/E. > > > sjfromm > I think it is accepted that REITs are valued on yield and NAV not PE. > Historically, discounts have been as low as negative (premiums) to NAV > in the boom years, and minus 40% or more in the trough years. for a REIT? - quote - > I would say that a yield above comparable corporate bonds, and a
One doc that came up on Google claimed the current premium is 10%, historic> discount of c. 15-10% for NAV is 'neutral': if discounts fall below > 10%, that is probably a sell signal, and rise above 25% it is probably > a buy signal. (you need to check the historic ranges: I could be way > off on my numbers) is 3.5% (premium, not a discount), but I'm not sure if that should be trusted. - quote - > REITs have gone up this year because everyone is chasing yield, which
Right.> I view as a mug's game. I don't know the US property market, but the > UK one looks very overcooked. As in, go there at your peril. Some of my $$ was *already* in REITs, and I was thinking of getting out to "take profits" (then going back in if/when the #s go back down). - quote - > The problem is 'where to put the money'? I don't see any asset
Right, you and I discussed this awhile back. I ended up putting about 1/6> classes that look cheap at the moment. I am (for the first time) > getting interested in gold shares (after all, they have only trebled > ;-) because I am a dollar bear. Euro bonds also look interesting > (same reason). Things that are starting to look very overvalued are > tech and emerging markets (and bonds, of course). of my assets in an international bond fund that doesn't hedge back into dollars and mainly invests in europe (American Century Int'l Bond, IIRC). - quote - > So I am holding more cash than I want to, because I cannot find
Yeah, I don't think things look that great out there.> attractive asset classes. - quote - > If you are an efficient market investor, then you should have a target
Right.> weighting in REITs (say 10%) and sell down (or buy up) in an annual > rebalancing to get to that %age target. Best, S |
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10-10-2003, 08:49 AM
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| Re: REIT outlook? "Stephen J Fromm" <stephen.fromm[at]nospam.invalid> wrote in message news:<5L%fb.16257$3b7.13892[at]nwrddc02.gnilink.net> ... - quote - > What's the current outlook for REITs?
I think it is accepted that REITs are valued on yield and NAV not PE.> I own shares in a mutual fund that invests in REITs. It's appreciated quite > a bit this year, and I'm wondering if I should sell. It's hard for me to > value it, though---the fund complex and Yahoo give different values for the > fund's P/E. > sjfromm Historically, discounts have been as low as negative (premiums) to NAV in the boom years, and minus 40% or more in the trough years. I would say that a yield above comparable corporate bonds, and a discount of c. 15-10% for NAV is 'neutral': if discounts fall below 10%, that is probably a sell signal, and rise above 25% it is probably a buy signal. (you need to check the historic ranges: I could be way off on my numbers) REITs have gone up this year because everyone is chasing yield, which I view as a mug's game. I don't know the US property market, but the UK one looks very overcooked. As in, go there at your peril. The problem is 'where to put the money'? I don't see any asset classes that look cheap at the moment. I am (for the first time) getting interested in gold shares (after all, they have only trebled ;-) because I am a dollar bear. Euro bonds also look interesting (same reason). Things that are starting to look very overvalued are tech and emerging markets (and bonds, of course). So I am holding more cash than I want to, because I cannot find attractive asset classes. If you are an efficient market investor, then you should have a target weighting in REITs (say 10%) and sell down (or buy up) in an annual rebalancing to get to that %age target. |
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#-1
10-05-2003, 10:26 PM
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| REIT outlook? What's the current outlook for REITs? I own shares in a mutual fund that invests in REITs. It's appreciated quite a bit this year, and I'm wondering if I should sell. It's hard for me to value it, though---the fund complex and Yahoo give different values for the fund's P/E. sjfromm |
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| outlook, reit |
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