Maguire

NY Times article on the chumps - investors - who bought buildings from EOP/Blackstone.

In Los Angeles, Maguire Properties was already laboring under heavy debts when the company paid Blackstone $2.87 billion for 24 buildings, 22 of them in Orange County, the center of the subprime mortgage industry. From the beginning, the loan payments for the Equity Office buildings exceeded the monthly revenue from the properties, according to the company’s regulatory filings.

The company’s vow to raise rents by 25 percent at its newly acquired buildings dissolved quickly as the vacancy rate in Orange County swelled to 16 percent, from 7 percent in 2006, making it harder to make mortgage payments. Maguire sold a number of its Equity Office buildings, some at a loss, and the board forced its chairman and founder, Robert F. Maguire III, to step down.

Ouch

Big rally today, obviously.

"Timmmmay" Geithner is supposedly announcing a plan on Monday afternoon. What a credulous group of investors we have to bid up garbage equities so much on such a flimsy basis.

I shorted more REITs (MPG, MHGC, MAC). I am increasingly bearish on the office, hotel, and retail REITs based on what I see in the restructuring business.

President Obama's economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.

Short

I am very short right now. Have been covering COF and selling BBY, MHGC, MPG, etc.

From the Comments Section

Le_Soldat said...

Wondering what your opinion on today's light volume bear market rally? I'm losing big on puts on cof, hig, cat, spg, x, and spy.

Do you think this "rally" has any legs, or do you believe there will be a sell off starting friday?

I made the mistake of buying Jan puts and they are really dropping in value. I just can't understand how we rally with worst consumer confidence and worst home prices.

Good Luck and Happy New Year.

CP said...

I think the rally is a joke. Anytime a decent stock (BGC) vastly underperforms a garbage stock (MPG), to me it is another sign of our broken market. Result: bearish.

That being said, you need to have staying power. Buying front month puts is problematic. I own Jan puts that are deep in the money that I don't want to sell for tax reasons. But I would never buy OTM front month puts just to watch the premium evaporate.

I have no idea when the next selloff will commence. All I believe is that most of my shorts will be zeros a year from now. So I am patient.