matts

What's your estimate for the current book value though?

In normal times that is true. but as pupil mentioned, in the short-term, upper-middle-class yuppies will keep their jobs and pay rent. The types of people that live in parks.... much more concentrated in blue-collar workers. UMH especially caters to the low-income crowd. i believe els and sui have much higher average rents. If you look longer term, parks have the best economics, but I'm trying to figure out if they might not get even cheaper in the short term as they start reporting massive delinquencies across their portfolios.

Maybe not, but equally it will go up a lot if performance improves because *any* buying will move the stock. If you look at it as a multi-year hold, it's less of an issue. In 3 years either the fund is successful, which means it will have a much higher market cap and likely more liquidity, or it will keep languishing and possibly even get liquidated. Petec.....respectively, the issue is not whether the stock price goes up or not on good performance. The lack of liquidity of the stock makes it impossible for all but he smallest investor to take a position in the stock and have any hope at all of exiting when they need or want to. The traded volume yesterday was 3509 shares (closing share price is $3.01). So sure a very small retail investor can accumulate a couple of thousand shares at the current price and then trade out when/if the price recovers to...lets say even the IPO price of $10. But honestly, is this really what we are trying to do here? Fairfax Africa shares cannot be accumulated in any meaningful amount without dramatically moving up the share price. Also, once accumulated, a significant number of shares cannot be disposed of without greatly influencing the share price downward. In my view, why bother. There are simply too many other opportunities out there where similar profit opportunities exist without the constraint of trading liquidity to worry about. Furthermore, management did say they would address this issue (lack of liquidity for the shares) and have not done so. Perhaps this alone is reason enough to avoid these shares. If you look at it as a multi-year hold, it's less of an issue. In 3 years either the fund is successful, which means it will have a much higher market cap and likely more liquidity, or it will keep languishing and possibly even get liquidated. It seems to me like you are looking at it as some levered ETF that you want to get out of once it pops, and in that case, you are right, it's not going to do a good job at that.

sure. would appreciate it if you give us a heads up about what you find. You have been looking very closely across the whole RE asset space so you are in a great position to speak to the relative value of the opportunities.

What about the manufactured housing park owners? ELS, SUI, UMH I understand that today they are a bit higher on the risk spectrum, but ELS and SUI have a great track record, and long term, they offer the most affordable kind of housing to a country where housing affordability is a problem for many. They also own the appreciating part of RE, the land, while letting the "owners" pay for the depreciating "home". Similar to multi-family, they benefit from density and economies of scale (1 security guard, 1 pool etc.). the houses are technically mobile, but in reality, it costs 5-10k to move one, so the vast majority of tenants have no choice but to eat the regular rent escalations. SUI and ELS have been great investments for years, and now you can get them at a 20-25% discount (from peak).

stranger things have happened, but it's tough to sneak a pet at these types of institutional quality apartments, much less an Airbnb. The doorman/doorwoman/doorpeople? always knew every resident at each of my yuppie apartments. it may certainly increase overall supply, but I don't think there'd be material Airbnb arbitrage folks at EQR's type of properties. matts, I can't answer your question with respect to how many people will stop paying rent. My anecdotal gut is a very small number. I am a member of the yuppie scum class; all my friends are paying their rent, have their jobs, and are just working remotely from ther $2/3/4K a month apartment buildings. haven't looked at BSR, but will. I just don't really know how to underwrite senior properties. to continue the anecdote fun, I used to trade agency CMBS which is backed by apartments and skilled nursing facilities/senior living. The financials on the senior living/nursing homes was just plain scary, low margins, low DCSR's, medicare volatility/noise. I am sure there are lots of opportunities and I'm missing A LOT of nuance between all the different property types (a 55+ community is very different than hospice/nursing home), but I'm not going to spend time learning about that stuff at this time. Easier to rent to my fellow yuppie scum, I understand that market better...though these prices are peskily going up by the day. up 7% intraday on some of my adds today. Thanks. Any thoughts on Single-family rental vs multi-unit?

I was just about to post that beach tweet. Sobering.

Also, wanted to bring up Senior living companies. Not multi-family, but also essential RE something like FVE of DHC. There are also some Canadian listed ones. EXE, SIA, CSH.UN do people think demand will go up after the initial panic is over? Are seniors not safer in a home, where the policies are now changing (limit visits, screen everyone coming in/out) vs having a grandparent living with you and a bunch of kids? I think covid will be with us for a long time and in that case the demand for retirement home/assisted living will go up. thoughts?

How do you think about how much rents these guys will be able to collect next 6 months or whatever? i can see on social media people are passing around the message "don't pay rent even if you still have a job. they can't evict you" I imagine lots of people who could probably afford it will be able to come up with a decent excuse of how the virus has affected them. HUD mortgages can be deferred but only half the multi-res mortgages in the US are HUd guaranteed. Have you looked at BSR REIT? TSX listed in USD (HOM.U.TO), but is pure sunbelt B apartment reit. The listing has historically led to a discount to peers. Also listed on the TSX, Tricon (TCN.TO) has one of the largest portfolios of rental Single-family homes. how would you rate the economic impact to rents, apartments vs SFH rental? Thanks. I'm also interested in owning RE here and your posts have been invaluable.

Richard, would you mind elaborating on the vix? higher it goes the more attractive the bet no? or do you mean the option premiums are too high? Thanks.

I like multi-family REITs and industrial REITs. That said, even after the large drop in the market, many are still at unattractive valuations. I am buying NextPoint Residential (NXRT). They are currently priced around 12x TTM AFFO, and growing 10-20% per year, with properties located primarily in the Sunbelt. I am also buying BSR REIT. It trades in Canada, but all properties located in the Sunbelt. Last I checked, this was also trading at about 13x TTM AFFO, and also growing at a reasonable clip. I have also been looking for residential property to purchase (e.g. apartment buildings, condos, duplex, single-family homes). Sadly the best I can find in my area are properties trading at roughly 20x TTM AFFO, which is not appealing to me. I'm hoping that the devastation in the AirBNB market leads to some people selling their properties at more reasonable prices. I've also considered buying land, and then building, but the current prices on suitable land aren't particularly appealing either. Happy to chat more about either in a separate thread, if someone wants to create that thread. There is a discussion on the impact for residential reits in the Read This If You Own Bank Stocks thread. I posted my concerns and would love your thoughts. Thanks.

What's your take on their tenant base? I imagine it's quite full of smaller companies since they don't talk about tenants I've never seen a breakdown of their tenants by size or credit quality. But on what they have said, and the types of companies that use warehouses in the places they have them, I don't think it's all smaller companies. See, for example, slides 5 and 15 here: http://www.griffinindustrial.com/assets/uploads/files/Investor%20Presentation%20-%20November%202018.pdf Thank you for the response. It looks like slide 5 is talking about tenants in the markets they operate in, not tenants in their buildings. from slide 15: "Key locations for national or international companies (regional/super-regional distribution)" nice but the next line is "For smaller tenants, the property may be a tenant’s sole or mission-critical location" so it's a bit of a wash. It's also under the Aquisition Strategy slide so not necessarily indicative of current tenants. The lack of any tenant profile disclosure is disconcerting. If you had very creditworthy tenants, you would be highlighting it.

What's your take on their tenant base? I imagine it's quite full of smaller companies since they don't talk about tenants

This changed as of this morning: https://mf.freddiemac.com/COVID-19/ https://www.fanniemae.com/portal/media/corporate-news/2020/renters-covid-19-multifamily-7002.html Basically, multifamily owners will be allowed to defer mortgage payments if they agree to pause evictions due to non-payment of rent. My day job is to own/operate multifamily investments, so I pay a lot of attention to this :-) Only about 50% of all multi-family mortgages are Fannie/Freddie insured. This a big help for the other half, but the way I see it, almost all tenants will choose to not pay rent, even if they can. It will just be too easy to say they were negatively affected by the virus: "I have to help my parents/sister" etc. I see the word spreading on social media that you can just skip rent for a while. there is no incentive for anyone to keep paying. You can't kick them out and it won't affect their credit rating. So you have multi-family managers that get minimal rents coming in, but still have to maintain the building, pay for utilities (if they are not individually billed to renters directly from the utility) If you can defer mortgage payments, you will still be cash squeezed because of costs, and if you can't defer, then you are at the mercy of the lender. I can see the pressure on landlords to limit evictions continuing for months, not weeks. Even once people are allowed to go look for work, many of them will not find one right away. What are you seeing in your business?

Not a bad idea at all. What would this look like in practice? Lets say I own 100 shares of Visa, average cost is 170. Current price is 145 or so. Buy 1 Call, strike price 85, expiration Jun-2022, for about 67/sh. Essentially you're buying 100 shares for 152/share (85 strike + 67 call price). But you only need to put up 6700 rather than 14,500 in the market. So your cost here is 7/share premium divided by the amount of cash you are borrowing ie 14500-6700 or 7800, about 9% or so. Pricey, but again it depends what your expectations are for that freed-up-cash. I'm sure LC knows this but just wanted to clarify for others: That $7 "cost" is spread over 2.2 years so the annual leverage cost is much less than 9% Also, visa pays a $1.20 annual dividend so you have to add (1.2x2.2 years) to the $7 cost as you miss out on dividends. That assumes the dividend will not change, which isn't necessarily true. Adjusting for the above I see about a 2.7% annual cost of leverage. It's not totally equivalent to borrowing on margin from your broker because the above assumes visa doesn't fall below $85 at the time of expiration.

AT&T is not in the bill collecting business. They'll send you off to collections at the exact same time as always. Just not true. They won't be sending you to collections. https://variety.com/2020/digital/news/cable-telco-not-cut-service-coronavirus-1203533615/ ok, it talks about cable cos, but it will be the same for all utilities. c'mon, companies are not dumb and will not want the massive PR hit. they will extend and pretend for as long as it takes and if they really need to, the government will give them some interest-free money (lots of avenue options) for being good boys.

How much money do you need? If you don't pay your phone bill, AT&T won't cut you off. If you don't pay for ANY utility right now, no one will cut you off. You won't be spending money on gas, leisure, hobbies etc. You're just buying food right now. I think most Americans have credit cards right? Trump is trying to send the checks by end of april and I'm betting most of the banks will waive the credit card interest if you really need it. Finally, most Americans will still be getting their next couple of paychecks because most Americans have normal jobs.

I'm in Poland, one of the most locked-down countries in Europe outside Italy. They did it early too. People here are calm, only the rare oddball wearing a mask or buying cartloads at the store. People are going about their daily lifes. But they are practicing social distancing which is good to see. Everyone is keeping a distance at the stores, public transport is being used, but people sit as far apart as they can. everyone who can work from home already is. Those that can't, go to work. All the grocery stores/banks/clinics are staffed. Overall, it's kinda nice, in an unfortunate kind of way. Life has just slowed down, compared to the usual hectic pace of western life. I think with the current measures put in place (and I mean the ones put in place globally over the last 48 hours), the outcome on main street will be less severe than many feared. As far as how much is already priced into the markets, well that's the million-dollar question.

It does matter. But you guys need to calm down. China is already getting back to work. South Korea is quickly approaching that stage. Yes, there have been and will continue to be second infections of the same individuals. But life has not fundamentally changed in China so it isn't going to fundamentally change in the west. You keep saying that you can see the wave coming because you saw what happened to China and extrapolated to the US. Congrats, you were more correct than many in this thread. But are you now conveniently not extrapolating what is happening in china NOW? and I don't want to argue about timing. Because no one knows. But eventually, we will go back to our regular lives with a much more aggressive flu/COVID season.

sorry to hear that. Do you know their ages?

Poland just closed all schools, museums, and cinemas. https://www.dailymail.co.uk/news/article-8099501/Poland-closes-schools-museums-cinemas-amid-coronavirus.html with only 25 confirmed cases this seems like a very proactive approach that the US and Canada are not implementing and I think they will pay a price. (I'm on the "this is a significant event but we will get through it" camp)

I don't think many here are panicking that they might die from the virus. But the economic impact will be real and non-trivial.

I find it interesting that even though this is supposed to be a value-focused board, the interest in idea threads drops sharply when the price drops, which is a bit counterintuitive. Bitcoin is just an extreme case of this.

Mondegreen, would you mind sharing your IV estimate for WED? I've read the thread and did my own research so I know the company well, but haven't been able to get comfortable on the price. thanks.

I would just point out that very RARELY do we have consensus about any topic here after more than a couple posts. Something for the OP to keep in mind. This isn't that hard of a question to answer, at least from an outside perspective