money pulling out of REITs?

**alex_li_98** Thu Mar 10, 2005 1:16 am

money pulling out of REITs?
The sector is looking down because perceived interest rate trend and money is pulling out of the sector. How will this affect CEI?

**blast_investor** Thu Mar 10, 2005 12:16 pm

This has been going on for a while.

There are good and bad REIT.

Bad REIT: mortgage REIT.
Good REIT: apartment REIT, office REIT.

Interest rate, inflation, dolllar devalue will have different effects on different sector of REIT.

My approach is to look for the inefficiency or mistake of market, and take advantage of it using value investing method.

Money leaving REIT does not mean anything. I am not following the Wall Street Money anyway in my approach.

**shu_wd** Thu Mar 10, 2005 1:00 pm

hi, Blast,

It is widely agreed that the real estate in US has reached (or is reaching) the peak of a bubble. Although I don't mean to project when this bubble will burst, could you comment what will be the impact on CEI if the bubble burst?

Thanks,

**jeep** Thu Mar 10, 2005 1:23 pm

Sorry if i'm interrupting. I think blast has mentioned this in his analysis of CEI. The bubble is mainly in residential sector but the business sector of real estate is pretty cold because of the tech bubble. CEI's business is mainly in business/office type.

shu_wd wrote: hi, Blast,

It is widely agreed that the real estate in US has reached (or is reaching) the peak of a bubble. Although I don't mean to project when this bubble will burst, could you comment what will be the impact on CEI if the bubble burst?

Thanks,

**blast_investor** Thu Mar 10, 2005 2:36 pm

I dissagree with "bubble burst" talk.

Real estate is very local. Even if there is A bubble burst in Boston or in Silicon Valley does not mean the whole US will have sharp drop of real estate price.

I do not see that happening.

I do see residential real estate (RRE) pricing is ahead of itself in short term. But that does not mean that RRE will have bubble burst or sharply crash of price in USA. I do not see that happening for the long run.

What I do see happening is sharply devaluation of US dollar and potential and "CURRENT" huge inflation. Inflation is no longer future, it is now.

If huge inflation comes and RRE price stay flat, then homeowners will see their homevalue less valuable. For example, inflation of 8% 1 year, real estate price rise 5% at same time. The real estate is 2% less valuable than a year before due to inflation. That itself will correct RRE ahead of itself problem. That is not bubble burst, the home price still rise 5% ahead! That is in theory only, in reality, not many investment tool is better than real estate in inflation times. Stock and bond are no good. In reality, real estate is likely to rise faster than inflation.

Real estate is great inflation and dollar devaluation hedge. It is going to be great investment vehecle for quite long time. Now it is more and more like the times in 1970's when real estate rised together and faster than inflation.

In real estate sector, I like commercial real estate, I like apartment where rents are getting better. However, I am not so bullish on homebuilders. I would avoid homebuilders.

Mortgage REIT (NLY, FBR, many banks in this sense) is going to be very dangerous, avoid. I fear of this and that was one reason I exited HRB before.

**blast_investor** Thu Mar 10, 2005 2:37 pm

I dissagree with that red statement. maybe in newspaper some experts or editors said that, but I am dissagreeing with them anyway.

I am cautious on Residential Real Estate (RRE). But even that, I do not agree that there will be immediate or soon crashing of real estate.

I only see RRE price flat or slow growing over next several years overall in USA where rents will go up and catch up with the RRE prices.

shu_wd wrote: hi, Blast,

It is widely agreed that the real estate in US has reached (or is reaching) the peak of a bubble. Thanks,