As a Taiwanese, I have to tell you that this is wrong, however. In Chinese, many nouns consist of two Chinese characters, but sometimes they do not have the same weight. The noun 得失, which means gain and loss respectively, is defined as loss only. The same rule applies here. 危機, which means crisis in Eng, only has the partial meaning of danger.
Mark, I really enjoy these videos you are making now during the crisis. Because you mentioned many times that this is not a rent holiday, I just wanted to bring to your attention (risk considerations that might be priced in) that in Greece for example, the government said commercial rents that their businesses were shut down and houses where the employees' work has been suspended will pay only 60% of their rent for April and May and that might be extended. So the 40% of the rent is foregone. I am afraid that something like this might happen in the US or Canada as well. Maybe not, I just wanted to highlight that if this lasts longer than expected things that you haven't considered possible before might happen. Dimitris Chlorokostas
Thanks Professor for another great content. You've mentioned that your strategy is not to have a position amounting for more than 4% of the wealth. Could you please recommend a read on what is the conservative distribution of wealth in terms of investments? Thanks in advance.
Regarding your 80/20 split of employed vs unemployed, what are your thoughts on the impact of landlords with multiple mortgages who are dependent on the rental income of their tenants? Or a more extreme case - AirBnB hosts who no longer have any guests? An interesting example of this is with the Ice Condos in Toronto, which have seen a spike in the number of units being listed on the market (units that were AirBnBs) While it's a drop in the pond, it feels like it could be a bit of a microcosm for the rest of the rental market in Toronto which would be reflected in residential reits
Great insights into the ETF market making process. APs and market makers may also hedge their position using options/futures and other securities that have a high correlation to their said exposure. Interesting to note is whats happened in the fixed-income market. Given some of the underlying securities were trading no bid, there were huge dislocations. Specifically, ETFs were trading at massive discounts to NAV (in the U.S. they are now trading at large premiums given the Fed's actions - look at LQD). As a result, ETF sponsors were no longer settling in cash which means they would deliver the underlying securities to the APs/MMs for them to sell (goodluck). Common practice is to cash settle rather than in-kind. I also wanted to point out in regards to mortgage REITs (agency), they tend to hedge by shorting agency MBS. However, with the Fed now buying MBS, many of them are now facing margin calls which they are struggling to cover, further exacerbating the indiscriminate selling.
Keep up the informative videos, love when you talk about reits, any chance you make a video of someone investing into just reits like a portfolio of 20 reits, downside and good side of doing so?
Hi mark. Don’t you think apartment reits could get hit some I think they will be strong long term. But a report came out today that 1/3 or people didn’t pay rent this month. Some will probably never be able to pay and landlord will have to take them to court. Also with 20-30 percent unemployment coming soon plus another 20-30 percent of people taking pay cuts there will not be the same demand going forward and rents will go down
Hey, really appreciate this video. I did not know about the ETFs and I guess I should have deduced that. Where did you learn about some of this stuff like what to look for? Thank you, really enjoyed your credit spread video as well
regarding Divy cut VS capital increase, is this why ABR went down from 5 to 4 cause mainly they announced this capital increase & preferred stock ? thank you
@Mark Meldrum thank you for this video Mark. I was wondering about how do you feel regarding Industrial REITs? Those are essential services right now too. Let's scratch Hotels and Lodging, but for the Specialty REITs: self storage and data centers, particularly the second seem to be well positioned to weather the storm and beyond. Do you look across the REIT spectrum or only to the categories you pointed?
Dear Dr Meldrum You mentioned to master one sector. I want to master reit like you. can you please guide what is the most effective method to learn and master this sector? Thanks
hi Mark, have a question about the price of the housing market. if reducing interest rate as a part of expansionary monetary policy, which will followed by a increasing money supply by the central bank, but there are only fixed amount of housing properties in the market, will this ultimately indicate inflation in the economy , which means increasing housing price in this case?
When I do the CFA videos - I spend a lot of time looking down at the screen (I use a Cintiq) - so all you would see for the most part is the top of my head looking down.
@@MarkMeldrum I guess holiday is the wrong term, in the respect the government did not pay. The major 4 banks just allowed all mortgage payments to be paused for up to six months and then extend the loan term and add those payments to the end of the loans.
Your broker should be feeding you any portfolio news through your news feed. You can also go to each company's website you are interested in, find Investor Relations, and sign up for automatic notices - so all press releases that are released to the media are e-mailed to you at the same time.
Mark, you made an interesting point on positions being maximum of 4% in your portfolio. Obviously position size varies from individual to individual but could you go into detail as to a good way to build out position sizes based on some of the PM CFA material?
People are talking about how AirBNB's top hosters are levered and own several houses through mortgages which are paid with room rents. Any comment on that?
This is true. There are many AirBnB entrepreneurs who own multiple properties. I see no reason why a bank would not work with them to some extent, and I see no reason why some of those locations cannot be filled with longer-term leases. Its what I would do - lease out what I need to to meet cash outflows. If this lasts a year before the travel industry gets back to normal, those leases are a great stop-gap measure. When life hands you lemons, find a way to make lemonade.
@@MarkMeldrum Agree, although I am not sure how different are these properties in terms of location, size, etc. vis-a-vis usual residential properties. I also suspect the income yield in properties used for AirBnB is higher than the yield in residential properties (otherwise they would be residential due to higher stability), thus at the limit some people may have problems servicing their debt.
Great content Mark! Love your REIT series! In an earlier video, you mentioned that you analysed Arbor Realty Trust (ARB) in a dedicated video. I could not find it in your TH-cam channel, is it for CFA candidates? Any chance to have access to it? You successfully prepared me for CFA LIII last year but I guess that I don't have access to the platform anymore. Should I re-register to see the ARB video? Thanks again for building our financial skills Mark.
Big thanks Mark! Just found not one but two videos... can’t wait to watch them, further build my knowledge and be able to decide whether ABR is something for me or not based on my personal goals and constraints. Thanks for sharing your expertise and passion with all of us and don’t worry about some people complaining about what they might have wrongly taken as financial advise. I guess most of us here understand this is not financial advice and your disclaimer is very clear... so please do keep those great videos coming :)
Hi Mark, Thanks for the content. Would it somehow be possible to make a package of new content videos in the CFA program that buyers of "One time to compleation" could buy at your website? Eg. in this case Level III candidates to buy new chapters from Level I and II (PM on ETF)?
When you have been a professor as long as I have - you simply get used to repeating the same things. Reinforcement. Asking me to stop now is like asking a bee to stop collecting pollen.
Mark Meldrum if there is a recession and the REIT has retail exposure it will get hit hard, also don’t you think people will foreclose on their house if they lose their job ? Lastly commercial REITs are going to go down as well since companies will have more employees working remotely due to the virus ... the first thing people do when they lose their job is to relocate somewhere more affordable
These are just talking points that are not supported by the data. Retail stores may get hit, but they still have to be somewhere. What does house foreclosure have to do with REITs? I strongly doubt offices will go away or downsize. If this big experiment has demonstrated one thing, it is that people want to go to to work - they don't want to work from home. I think office space will be more prized now, not less. Can't run a government office from home, can't operate a grocery store from home, can't have a court house, hospital, law firm, medical building, dentist office, etc... from home. The big message from many managements is that something is lost when working from home. Not all REITs are identical. You have to look at the space they are in, the types of tenants they have, their tenant concentration. Blanket statements like people are going to work from home from now on or nobody's going to pay their rent are sensationalist, and not at all supported by any evidence from any REIT that I am aware of to date.
Mark Meldrum thanks for the reply and I do hope you are right. I just remember kevin o Leary saying he sold all of his REITs and that 10-15% of the companies will be downsizing their office space however we could see an increase in office leases due to the need for more distance. I have been buying STWD a few days ago since I’m stuck in that one. Also purchase some STOR as well.
Crisis in Chinese is written with the characters meaning "danger" and "opportunity" ;)
危机
危机
危机
As a Taiwanese, I have to tell you that this is wrong, however. In Chinese, many nouns consist of two Chinese characters, but sometimes they do not have the same weight. The noun 得失, which means gain and loss respectively, is defined as loss only. The same rule applies here. 危機, which means crisis in Eng, only has the partial meaning of danger.
Top material, awesome, thank you
Excellent and very clear. I buy equity Reits and have taken the same approach
Mark, I really enjoy these videos you are making now during the crisis. Because you mentioned many times that this is not a rent holiday, I just wanted to bring to your attention (risk considerations that might be priced in) that in Greece for example, the government said commercial rents that their businesses were shut down and houses where the employees' work has been suspended will pay only 60% of their rent for April and May and that might be extended. So the 40% of the rent is foregone. I am afraid that something like this might happen in the US or Canada as well. Maybe not, I just wanted to highlight that if this lasts longer than expected things that you haven't considered possible before might happen.
Dimitris Chlorokostas
Please do more of those. Great video Dr. Meldrum!
Phenomenal video Mark! Thank you for the wonderful insight.
Thank you ! I was looking for material on REITS. I will watch this video with lots of attention !
Impeccable! Thank You Mark. Keep doing it!
Thanks Professor for another great content. You've mentioned that your strategy is not to have a position amounting for more than 4% of the wealth. Could you please recommend a read on what is the conservative distribution of wealth in terms of investments? Thanks in advance.
I am not sure there is a collection of rules aggregated somewhere. These are rules you define yourself.
Regarding your 80/20 split of employed vs unemployed, what are your thoughts on the impact of landlords with multiple mortgages who are dependent on the rental income of their tenants? Or a more extreme case - AirBnB hosts who no longer have any guests? An interesting example of this is with the Ice Condos in Toronto, which have seen a spike in the number of units being listed on the market (units that were AirBnBs)
While it's a drop in the pond, it feels like it could be a bit of a microcosm for the rest of the rental market in Toronto which would be reflected in residential reits
TheMarek999 most real estate margins are 6-7% of the property value, then subtract debt payments.
Great insights into the ETF market making process. APs and market makers may also hedge their position using options/futures and other securities that have a high correlation to their said exposure. Interesting to note is whats happened in the fixed-income market. Given some of the underlying securities were trading no bid, there were huge dislocations. Specifically, ETFs were trading at massive discounts to NAV (in the U.S. they are now trading at large premiums given the Fed's actions - look at LQD). As a result, ETF sponsors were no longer settling in cash which means they would deliver the underlying securities to the APs/MMs for them to sell (goodluck). Common practice is to cash settle rather than in-kind.
I also wanted to point out in regards to mortgage REITs (agency), they tend to hedge by shorting agency MBS. However, with the Fed now buying MBS, many of them are now facing margin calls which they are struggling to cover, further exacerbating the indiscriminate selling.
Interesting stuff. Thanks.
Keep up the informative videos, love when you talk about reits, any chance you make a video of someone investing into just reits like a portfolio of 20 reits, downside and good side of doing so?
The Chinese symbol for danger is equal to risk + opportunity. Professor damodran said this in his book investment valuation
Hi mark. Don’t you think apartment reits could get hit some I think they will be strong long term. But a report came out today that 1/3 or people didn’t pay rent this month. Some will probably never be able to pay and landlord will have to take them to court. Also with 20-30 percent unemployment coming soon plus another 20-30 percent of people taking pay cuts there will not be the same demand going forward and rents will go down
Hey, really appreciate this video. I did not know about the ETFs and I guess I should have deduced that. Where did you learn about some of this stuff like what to look for? Thank you, really enjoyed your credit spread video as well
All of that is within the content of the CFA material as you go through the 3 levels.
So are we gonna get a short squeeze at some point?
Really appreciate for your sharing!
regarding Divy cut VS capital increase, is this why ABR went down from 5 to 4 cause mainly they announced this capital increase & preferred stock ? thank you
Can the same be said about oil & gas MLPs?
@Mark Meldrum thank you for this video Mark. I was wondering about how do you feel regarding Industrial REITs? Those are essential services right now too. Let's scratch Hotels and Lodging, but for the Specialty REITs: self storage and data centers, particularly the second seem to be well positioned to weather the storm and beyond. Do you look across the REIT spectrum or only to the categories you pointed?
Dear Dr Meldrum
You mentioned to master one sector. I want to master reit like you. can you please guide what is the most effective method to learn and master this sector?
Thanks
Very informative video. Really seems like the sell off of mREITs is very over blown.
*some mREITs
hi Mark, have a question about the price of the housing market. if reducing interest rate as a part of expansionary monetary policy, which will followed by a increasing money supply by the central bank, but there are only fixed amount of housing properties in the market, will this ultimately indicate inflation in the economy , which means increasing housing price in this case?
outstanding information and analysis
It’s way easier to follow a discussion when you’re on the screen. I wish we had that type of presentation on our CFA videos.
When I do the CFA videos - I spend a lot of time looking down at the screen (I use a Cintiq) - so all you would see for the most part is the top of my head looking down.
not all of them just service originated morts...some do that but most assets are just the agency mbs....
Actually Australia did give a six month mortgage holiday. But regardless, good video. Thanks.
The government paid? It would seem dictatorial to demand a group of lenders simply lose.
@@MarkMeldrum I guess holiday is the wrong term, in the respect the government did not pay. The major 4 banks just allowed all mortgage payments to be paused for up to six months and then extend the loan term and add those payments to the end of the loans.
Ah. Many Canadian banks are doing the same thing - deferment not forgiveness.
Thank you for your video sir. How do you feel about MFA financial?
Hi Mark, Nice video as always .Which broker you are using?is that interactive brokers?
Yes it is.
Awesome, any update on ABR ? Seems interesting the action there
Hi - Does anyone know where the information on screen at @30.17 mins onwards is available from? Thanks
Your broker should be feeding you any portfolio news through your news feed. You can also go to each company's website you are interested in, find Investor Relations, and sign up for automatic notices - so all press releases that are released to the media are e-mailed to you at the same time.
Mark, you made an interesting point on positions being maximum of 4% in your portfolio. Obviously position size varies from individual to individual but could you go into detail as to a good way to build out position sizes based on some of the PM CFA material?
Sounds like a good basis for a video.
Where does the money go when prices collapse and market crashes?
People are talking about how AirBNB's top hosters are levered and own several houses through mortgages which are paid with room rents. Any comment on that?
This is true. There are many AirBnB entrepreneurs who own multiple properties. I see no reason why a bank would not work with them to some extent, and I see no reason why some of those locations cannot be filled with longer-term leases. Its what I would do - lease out what I need to to meet cash outflows. If this lasts a year before the travel industry gets back to normal, those leases are a great stop-gap measure. When life hands you lemons, find a way to make lemonade.
@@MarkMeldrum Agree, although I am not sure how different are these properties in terms of location, size, etc. vis-a-vis usual residential properties. I also suspect the income yield in properties used for AirBnB is higher than the yield in residential properties (otherwise they would be residential due to higher stability), thus at the limit some people may have problems servicing their debt.
Great content Mark! Love your REIT series! In an earlier video, you mentioned that you analysed Arbor Realty Trust (ARB) in a dedicated video. I could not find it in your TH-cam channel, is it for CFA candidates? Any chance to have access to it? You successfully prepared me for CFA LIII last year but I guess that I don't have access to the platform anymore. Should I re-register to see the ARB video? Thanks again for building our financial skills Mark.
If you were subscribed to our content, then you still have an archive. We have added the Applied Series to all archives.
Big thanks Mark! Just found not one but two videos... can’t wait to watch them, further build my knowledge and be able to decide whether ABR is something for me or not based on my personal goals and constraints. Thanks for sharing your expertise and passion with all of us and don’t worry about some people complaining about what they might have wrongly taken as financial advise. I guess most of us here understand this is not financial advice and your disclaimer is very clear... so please do keep those great videos coming :)
Great vid Mark! Just wondering if you also hold REITs in other geographies or strictly in North America
North America only.
Great video. What is your take on MFA financials?
If a mReit is using a lot of Repos instead of credit facilities (i'm pointing at you Ladder Corp) is that a bad sign?
Credit facilities are also known as repurchasing credit facilities. So without knowing the specifics, they may serve the same function.
right?
Hi Mark,
Thanks for the content. Would it somehow be possible to make a package of new content videos in the CFA program that buyers of "One time to compleation" could buy at your website? Eg. in this case Level III candidates to buy new chapters from Level I and II (PM on ETF)?
Wow Gerard Butter knows a lot about REITs !
Great videos, thanks. However, stop repeating that there will be no rent holidays, but rent deferrals. We got the point the first time!
When you have been a professor as long as I have - you simply get used to repeating the same things. Reinforcement. Asking me to stop now is like asking a bee to stop collecting pollen.
Mark Meldrum lol
NRZ down 30%. ahahaha, I have just bought some so thug life!
also if people dont pay rent, the landlord may not be able to cover their mortgage.
For btb we dont talk about the almost 100% payout ratio, shhhh
20% unemployment will definitly have an impact on REITs! Are you kidding?
How?
Mark Meldrum if there is a recession and the REIT has retail exposure it will get hit hard, also don’t you think people will foreclose on their house if they lose their job ? Lastly commercial REITs are going to go down as well since companies will have more employees working remotely due to the virus ... the first thing people do when they lose their job is to relocate somewhere more affordable
These are just talking points that are not supported by the data. Retail stores may get hit, but they still have to be somewhere. What does house foreclosure have to do with REITs? I strongly doubt offices will go away or downsize. If this big experiment has demonstrated one thing, it is that people want to go to to work - they don't want to work from home. I think office space will be more prized now, not less. Can't run a government office from home, can't operate a grocery store from home, can't have a court house, hospital, law firm, medical building, dentist office, etc... from home. The big message from many managements is that something is lost when working from home. Not all REITs are identical. You have to look at the space they are in, the types of tenants they have, their tenant concentration. Blanket statements like people are going to work from home from now on or nobody's going to pay their rent are sensationalist, and not at all supported by any evidence from any REIT that I am aware of to date.
Mark Meldrum thanks for the reply and I do hope you are right. I just remember kevin o Leary saying he sold all of his REITs and that 10-15% of the companies will be downsizing their office space however we could see an increase in office leases due to the need for more distance. I have been buying STWD a few days ago since I’m stuck in that one. Also purchase some STOR as well.
This is the kind of exchange I enjoy. No insults, just arguments.