High Yield REITs: The Week That Was

by REIT Wrecks on August 25, 2008

I wish it were the week that wasn’t. Concerns about the commercial real estate market bubbled to the top of the news and Research Recap did a great job of compiling it all. This week investors looked back to a June report from Standard & Poor’s showing that the CMBX index was causing commercial real estate capital to dry up. Hmmm, sounds about as exciting as a honeymoon in 2080.

More recently, and more seriously, Moody’s also noted last week that US commercial real estate prices fell for the fourth straight month in June, and the New York Times reported that some worry that commercial property loans will be next. (See also How Could My Big Beautiful Loan Go So Bad, So Quickly).

Fannie Mae and Freddie Mac appear to be inching closer to some sort of potentially hostile takeover by the federal government. According to Research Recap, Fannie CEO Daniel Mudd told public radio’s Diane Rehm that Fannie had neither requested nor been offered a bailout and he did not anticipate asking for one. Asked about Fannie’s subprime debt Mudd described it as “very tiny, actually it rounds out to about zero percent of our overall book.”

While nobody expects the number of failures that characterized the savings and loan crisis, Regional US Banks may need to be rescued, according to a well-read post from Oxford Analytica. However, unlike the largest financial firms, regional banks may not be regarded as too big to fail.

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REIT outlook
Disclosures: Except for the recent pucker, none at the time of this writing

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