Rising Rates to Ruin REITs?

Featuring Mark Newton

Technical analyst Mark Newton of Newton Advisors says now is the time to bet against the high-yielding real estate investment trusts. He explains the catalysts and lays out the trade in this interview with Brian Price. Filmed on May 14th, 2018.

Published on
18 May, 2018
Topic
Trading, Housing Market, Technical Analysis
Duration
9 minutes
Asset class
Real Estate, Equities
Rating
58

Comments

  • LE

    Lee E.

    27 5 2018 12:28

    0       0

    not great RR. I like at least 3 to 1 RR.

  • TP

    Tom P.

    24 5 2018 21:06

    0       0

    Well presented, so thumbs up. But I'll take the other side.

    I'll swerve TA on little ETFs that price off huge macro environment changes like US curve wobbles.

  • lb

    larry b.

    22 5 2018 22:01

    1       0

    not a great risk reward trade.

  • CM

    Chris M.

    19 5 2018 21:17

    0       0

    Ha! I told my G/F that I was doing this exact trade this past Thursday. Nice. I think this is a great trade too

  • MS

    Michel S.

    19 5 2018 02:28

    4       0

    The US REIT sector has been in a downtrend primary because of the square foot per capita availability. The penetration of shopping centres in the USA is 23.6 square feet per person, compared with 16.5 square feet per person in CANADA and 4.6 in the UK. To much offer in the USA. Many USA REIT as been down 50% plus in 18 month,, the Sears and the like closing have hurting them. The effect of the interest rate depends on the % of debt the REIT carry and how it's finances, look the debt/cap, bonds% maturity date, bank loans.
    MY LONG TRADE IDEA: In the USA, DDR $7.26 (BV $7.86, DIV 10.4%, DEBT/CAP 57%). And CBL $4.40 (BV$6.66, DIV 18%, DEBT/CAP 76%) look good for an upside IF they break out resistance. Sell if it break the 10SMA hourly if your nervous.
    I prefer these Canadian REIT: PRV.UN $2.25 (BV$2.11, DIV9%, DEBT/CAP 66%) And BTB.UN $4.80 (BV$5.14, DIV 8.75%, DEBT/CAP 66%).. These 2 REIT are located in Quebec, as you know is mostly french speaking. There is less online offer, amazon is yet not very well use and Quebecer still love to go shopping in mails . NOW negative sentiment might be at play so I suggest to enter on the technical. Regarding the interest rate. On a 200 year chart you realize that low interest is not the exception, it's the norm.. the 7-10-15% is the exception. The BOC won't follow the FED in raising rate, that doesn't mean the banks won't raise rate but I suspect that we are close to the top.. I disclose I have CBL, PRV and BTB. Lastly buy when there is fear, and sell when there is euphoria is not easy, but it work..

  • PC

    Peter C.

    19 5 2018 01:28

    0       0

    Excellent & hindsight is the proof. I like to the hear this practical right down to ticker symbols.

  • JO

    Jay O.

    18 5 2018 19:05

    2       0

    VNQ down 20% since July ‘16 peak. Perhaps a little late for this trade.

    • CB

      Chris B.

      18 5 2018 20:05

      0       0

      I agree, seems too easy and a crowded trade. better ways to play potential higher move in rates

    • PC

      Peter C.

      19 5 2018 01:29

      1       0

      I think VNQ is also down since July2016 because of its high retail exposure & Amazon

  • IM

    Istvan M.

    18 5 2018 18:17

    5       0

    why not just short treasuries?

    • JO

      Jay O.

      18 5 2018 19:02

      1       0

      Totally agree.

    • CM

      Chris M.

      19 5 2018 21:16

      0       0

      Cause treasuries are crowded and due for a dead cat bounce, and this probably wouldnt be reflected in the REITS as pronounced as the 10 or 5 notes. Just looked bounce is there now. Wanna see where it goes to. But still feel real estate and banks will be hit really hard
      If the 10 yr stays below 120 print should be a good entry for short REIT ETF. One like IYR. As opposed to Vanguard. IYR has better spreads in the options chain. IMHO

  • CM

    Carlos M.

    18 5 2018 17:28

    1       0

    Agree 100% I have been long SRS on the basis of higher IR since early May and DRV sounds very interesting as well though I rather buy a call option on it as vol is cheap and it limits my downside. Mark def has good timing both for this one and OIH he was spot on.
    cheers and keep it up.

  • TB

    Tim B.

    18 5 2018 16:38

    17       0

    Dear RV,

    For these short term trade videos, I suggest that you upload the raw video immediately after filming, or something with minimal post-production. Those of us who actually might act on the content are interested in the trade idea, not the fancy video editing.

    Thanks for your consideration...

    • JM

      Johann M.

      18 5 2018 17:46

      8       0

      Same basically happened on the Brazil trade idea.... already started its move by when the video was published increasing medium term put premiums.

  • AI

    Anton I.

    18 5 2018 16:32

    0       0

    If REIT has an inverse correlation with the bond yield, then who will benefit from a rise of the yield?

  • KP

    Kaspars P.

    18 5 2018 11:23

    22       0

    4 day publishing lag really made the difference here...

    • Nv

      Nick v.

      18 5 2018 12:16

      14       0

      Yes, the long lag means someone else made the money. Not the viewers

    • CM

      Carlos M.

      18 5 2018 17:33

      6       0

      indeed short term trades should be posted same day. Though still larger move to come as inflation picks up