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Two Ways: Kicking Commercial Real Estate While It's Down

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Strengthen your portfolio in good times and bad.

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Commercial real estate prices in the US plunged by 10.5% in the first quarter and by 12.2% in 2008. So says global real estate data firm IPD.

According to Reuters, for all of 2008, monthly income rose 5.4% in the US. But the overall total return for US commercial real estate dropped 7.4%, IPD said in a report released today.

During the first quarter of 2009, monthly income increased 1.4%, while the total return on US commercial real estate dipped 9.2%.

Breaking down the numbers, office property led to the downside with a total return of -8.2%. For 2008, it dropped by 12.8%. This was followed by apartment values, which plunged 12.2% last year; then by industrial property and retail real estate, which slumped 11.7% and 11.4%, respectively.

Revisit Professor James Anderson's Why Commercial Real Estate Can't Be Saved.

From the Bull Pen: Bulls can look elsewhere, such as to the coal sector. Massey Energy (MEE) displayed impressive relative strength today in a down tape. A sell stop can be set below $20.

From the Bear Cave: In commercial real estate, bears can consider Vornado Realty Trust (VNO). See the pattern of lower highs developing. Follow-through on the downside would be especially encouraging for bears but note that the stock could see a short bounce off of its 50-day moving average ($43).

The only question: How long would that bounce last, even if it were to occur?

Hope it was a great one, Minyans. Good night!

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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