Using Veritas to Construct the "Per…

29-04-2017 Hits:85837 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:80052 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:79912 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:84394 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:80932 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:83172 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:54186 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:82315 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:82157 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:82029 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:88072 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:85935 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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Following the empirical evidence that banks share price moves are outstripping their fundamental performance, I have decided to run the same analysis with REITs that have beat the S&P 500. In the chart below, General Growth Properties had to be stripped out since it had a 3,000% return, it made the rest of graph participants illegible. Click to enlarge.

 reit_over_broad_market.png

The metrics used to segregate the companies were:
  1. TTM NOI / Current EV               
  2. Y-o-Y Growth in Rental Income               
  3. Q-o-Q growth in Rental Income           
  4. Y-o-Y Growth in NOI
  5. Q-o-Q growth in NOI
  6. Y-o-Y Growth in FFO
  7. Q-o-Q growth in FFO
  8. EBITDA/Interest expenses
  9. Total debt-to-Gross real estate investments
  10. Total Debt-to-Current EV
  11. Trailing 12 months EBITDA
  12. Trailing 12 months interest expenses
  13. Trailing 12 months NOI               
  14. Plus a whole host of other performance related criteria. All in all, very rich and informative model for those interested in the space.

A heat map was created to visualize the trend in fundamentals for those companies whose performance bested that of the broad market. As one may have guessed, the heat map is throwing off a lot of red, with implied cap rates (NOI/EV) going up as quarter over quarter net operating income declines in the face of both rising share prices and drastically falling rents and land values. Below is a snapshot of the heat map. Although this is a subscriber download, there is definitely something to be gleaned from trends highlighted below. Twilight zone, here we come...

 Click to enlarge...

reit_heat_map.jpg

This screen shot shows both net operating income, and the industry's own made up version, funds from operations, both trending down in general on a quarter over quarter basis. What is not shown in the screen shot, but can probably be implied is that net operating income divided by enterprise value is also facing a negative trend (going up). One can make the argument that the share prices of these companies are increasing due to the forward looking promise of improved performance and a better outlook, but the evidence at hand certainly does not support such a viewpoint. As detailed in the Bank Performance Post, the macro seen looks negative for the foreseeable future. Referemce the snippets from the  File Icon Middleton vs Ackman vs Hovde on GGP - public edition document:

unemployment.jpg

consumer_confidence.jpg

retail_sales.jpg

Commercial Real Estate credit losses are REALLY ramping up as well, and this is just the beginning! See CRE 2010 Overview. 

image003.png

cre_image006.png

cre_image009.png

While you're at it, check out "The Latest REIT Updates are Now Available" for added measure.You can see that not only is the collateral behind the failing residential loans imploding at an unprecedented rate, but the stuff behind the failing commercial loans make residential housing look downright rosy in comparison. Compare and contrast how fast the CRE values are falling against those of the residential values that get much more press and airtime in the mainstream media...

  cre_image013.png

See CRE Consulting for more info on CRE trends.

Tell me, dear readers, are we in Japan yet???!!! Don't let those who don't run the numbers tell you otherwise. We are following damn near (save some differences in structural rigidity) lockstep in their path. Okay, I'm busted! Not exactly lockstep. Our property decline is probably STEEPER! Look at the second leg.

  cre_image017.png

"Wait a minute buddy!" is being shouted at me from behind the Internet pundit's bullish keyboard. We are in the midst of a recovery, and GDP is forecasted to increase. You know, forecasted by the same guys who somehow missed the biggest stock market and economic drop of a lifetime. Yeah, I know... The GDP thang! Well, wasn't GDP humming right along when all of this mess started. This is about assets and liabilities, not revenue inflows and outflows. I hope you guys have been practicing the use of your chopsticks, cause here we go, GDP increase and all!!!

cre_image020.png

A tertiary advantage to this exercise is that REIT who look like they may have actually deserved an increase in share price are exposed as well. If one were to look at the first few REITs in the list, you will find those that have the strongest fundamental performance trends over the last four quarters. Yes, they are there.

The REITs with the healthiest set of fundamentals are specialty REITs, not retail or office. Subscribers should reference the first three companies at the top of the model in the last tab, "Heat Map".

All levels of subscribers may download the model here: REITs that beat the broad market for 2009 2010-01-11 05:07:31 315.69 Kb.

Tomorrow, I will present a similar model for the insurance industry.