Why US office reits are unlikely to pull through...and will soon collapse - Printable Version
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Why US office reits are unlikely to pull through...and will soon collapse - sgbuffett - 28-03-2023
If you do the maths it is simpler than Singapore maths.
These reits have 40% gearing. 40%borrowing. For every dollar of assets they have 40cts borrowings. A 60% drop in price wipes out the residual value to zero. A 50% drop in value brings it down by 85%. When valuations drop they have to raise cash to maintain the gearing, doing a rights issue will lock in losses permanently for original share holders..eg. First Reits, APTV...by then they lose 90% of their money.
The thing is valuations of the assets has already fallen close to 50% and occupancy halved even before recession or a slowdown.
It is unlikely any of the reits can make it through, they will either collapse.or lose 90+% in a rights issue.
Event hough they have fallen 70%, if I have any I will just sell and take back what is left rather than wait around for the collapse.
https://www.cnn.com/2023/03/27/investing/premarket-stocks-trading/index.html
RE: Why US office reits are unlikely to pull through...and will soon collapse - sclim - 28-03-2023
will reits owner suffers same fate as bank shareholders. got their interest zap and gone?
can happen?