Look, if VNO is having trouble parting with some of its cash, paying 60% of its qt dividend in stock, the sector is in for huge investor backlash/share price depreciation/multiple compression.
First of all, issuing dividends in the form of stock is incredibly dilutive. Furthermore, the only reason why most people by reits is for their dividends. Expect to see a lot of VNO type deals and full blown dividend cuts, during the course of 2009.
Basically, the sector is about to lose a whole class of investor. The old dude down the block who needs yield to pay for his country club membership. Yeah that guy, he’s a fucking seller of IYR today.
Within the Reits, I want to be a net seller of VNO, SPG, BXP, KIM and SLG. Ideally, I would like to short them on a bounce.
Following the JPM report and impressive upside reversals in Europe this morning, I would not be surprised to see the lunatic fringe of the bull camp attempt to run the market up by 1% or so. However, be very careful of a head fake, especially with oil getting punched in the scrotum.
And, let’s not forget about potential crisis looming at BAC.
With my money, I will look to lock in some gains here and build my cash position to over 50%. I will not buy anything on a dip, including AAPL. My position is still extraordinarily bearish. But, at the same time, I don’t feel like pushing the envelope here. Maybe I am getting old or some shit.
Either way you slice it, the economy is fucked and the reits are fucked in a most egregiously unique way.
Needless to say, this is no time to be an asshole dip buyer.
Comments »