Again, the FED has as a mission economic stability and employment. All of the FED policies since Greenspan and Bernanke has been about the opposite. A agency tied to the Federal government is acting criminally when it uses the American people as fodder. THIS IS WHY THE WORLD SEES THE FED AS CRONY AND CRIMINAL. WE CAN USE THIS TO REVERSE ALL THIS POLICY AND WEALTH INEQUITY.
I want to end my discussion on tax policy by moving to REIT. Tax policy today is all about consolidating wealth to the top, keeping them from paying taxes, and then making sure they keep that wealth for generations----the opposite of progressive and liberal. See how Clinton neo-liberals are not progressive and liberal?
First, I want to create a segue into the next topic of REIT tax policy by saying that in Maryland and across the country---Clinton neo-liberals use the term SMART GROWTH for what is the consolidation of real estate into the hands of the rich all while pretending it is tied to 'greening'. SMART GROWTH, SMART METER, HILLARY FOR SMART PEOPLE. All of the phrases have nothing to do with being smart---it is only about consolidating wealth. So, the movement to raise the estate tax exclusion at the same time they are consolidating farmland as was done in the mid-west to give us BIG AG is no coincidence. They are moving the policy of BIG AG to states that will not be made dust bowls by global warming. So, O'Malley and the Maryland Assembly are attempting to attack the small farmers in Maryland as they did in the mid-west all to control food. Look overseas at who was enslaved by this BIG AG policy and you see it was everyone----not only people of color.
WAKE UP----DO NOT ALLOW RACE AND CLASS PREJUDICE KEEP YOU FROM FIGHTING FOR EQUAL PROTECTION----IT'S WHAT MAKES ALL OF US CITIZENS!
Bush neo-cons control the oil-----Clinton neo-liberals control the food with Monsanto and BIG AG.
Kissinger: “Control oil and you control nations; control food and you control the people.”
US strategy deliberately destroyed family farming in the US and abroad and led to 95% of all grain reserves in the world being under the control of six multinational agribusiness corporations
Read more at http://investmentwatchblog.com/kissinger-control-oil-and-you-control-nations-control-food-and-you-control-the-people-us-strategy-deliberately-destroyed-family-farming-in-the-us-and-abroad-and-led-to-95-of-all-grain-reserves/#zHhO2k9kVsY2U7cF.99
If people do not understand the Reagan/Clinton drive to move all wealth to the top and that includes real estate you can see this history with the tax policy REIT. It goes without saying that this policy originated in Maryland and Baltimore was the earliest to shelter wealth and corporations from taxes using REIT. Flash-forward a few decades of using this policy and you have large corporate estates being built all paying no property taxes----like the Big Box retail stores, Micosoft and Google global corporate headquarters, or Johns Hopkins here in Baltimore. It is a huge factor in loss of public education funding as school funding is tied to property taxes. I spoke of Trust laws skirting the estate tax goal of keeping wealth under control----this was the first attempt. It rewards a corporation for expanding its real estate holdings by requiring 75% of its value by tied to real estate. Think McDonalds and all national chains. As the article from yesterday stated, now railroads and soon to be privately-funded interstate roads will fall under REIT----no property tax on all that property. REIT is simply a policy to remove the responsibility of paying taxes from big business by pretending shareholders are going to pay the property taxes through their annual taxes. Guess what? Major shareholders----the biggest players cheat and never pay those shareholder taxes. The small investor that plays honestly and fears the taxman may pay their small amount for the small number of REIT shares....but that is nothing. REIT is simply used to make property taxes go away for the big corporations. So, when Labor Union leaders and Justice organizations and ministers always come out for a Clinton neo-liberal----they know they are working to end corporate taxation and starving government coffers ----and by extention moving the tax burden to you and me.
Maryland is the Clinton neo-liberal/Bush neo-con state loving this tax evasion best!!!!!!
ALL OF MARYLAND POLS ARE GLOBAL CORPORATE POLS!
This is one of the reasons you see a new business immediately try to expand nationally right away and often go bankrupt----they need to quality for REIT if they are to compete. So, REIT is yet another ant-competitive law that goes against what Republicans and free-trade and market neo-liberals say they support.
What is a REIT?
A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types regular income streams, diversification and long-term capital appreciation. REITs typically pay out all of their taxable income as dividends to shareholders. In turn, shareholders pay the income taxes on those dividends.
REITs allow anyone to invest in portfolios of large-scale properties the same way they invest in other industries – through the purchase of stock. In the same way shareholders benefit by owning stocks in other corporations, the stockholders of a REIT earn a share of the income produced through real estate investment – without actually having to go out and buy or finance property.
Most REITs are traded on major stock exchanges, but there are also public, non-listed and private REITs. The two main types of REITs are Equity REITs and Mortgage REITs. Equity REITs generate income through the collection of rent on, and from sales of, the properties they own for the long-term. Mortgage REITs invest in mortgages or mortgage securities tied to commercial and/or residential properties.
Today, REITs are tied to almost all aspects of the economy, including apartments, hospitals, hotels, industrial facilities, infrastructure, nursing homes, offices, shopping malls, storage centers, student housing, and timberlands. REIT-owned properties are located in every state and support one million U.S. jobs annually. U.S. REITs have become a model for REITs around the world, and now more than 30 countries around the world have adopted REIT legislation.
To qualify as a REIT a company must:
- Invest at least 75 percent of its total assets in real estate
- Derive at least 75 percent of its gross income from rents from real property, interest on mortgages financing real property or from sales of real estate
- Pay at least 90 percent of its taxable income in the form of shareholder dividends each year
- Be an entity that is taxable as a corporation
- Be managed by a board of directors or trustees
- Have a minimum of 100 shareholders
- Have no more than 50 percent of its shares held by five or fewer individuals
REITs offer investors a number of benefits, including:
- Diversification: Over the long term, Equity REIT returns have shown little correlation to the returns of the broader stock market.
- Dividends: Stock exchange-listed REITs have provided a consistent income stream to investors.
- Liquidity: Stock exchange-listed REIT shares can be easily bought and sold.
- Performance: Over most long-term horizons, stock exchange-listed REIT returns outperformed the S&P 500, Dow Jones Industrials and NASDAQ Composite.
- Transparency: Stock exchange-listed REITs operate under the same rules as other public companies for securities regulatory and financial reporting purposes.
REIT tax policy is indeed what imploded the mortgage market and is behind much of the bond market collapse and as this article shows---it is what creates home equity to fall for homeowners using their housing as their retirement. The idea of buying a home for equity to use for retirement was a sound policy until Clinton neo-liberals joined Republicans in making our housing/real estate system a Wall Street market.
Again, it was Baltimore and Johns Hopkins that broke ground on this attack on the American people's ability to own and create equity with their homes. It fueled the subprime mortgage loan fraud which by no coincidence was aimed at working and middle-class urban homeowners. It now is behind the coming bond market crash. Wall Street will probably simply create a credit swap insurance for these REIT trading firms to protect the rich from the coming economic crash while all public projects leveraged with REIT investments will default.
MARYLAND IS LEVERAGED TO THE GILLS WITH REIT TAX DEALS THANKS TO THE MARYLAND ASSEMBLY AND OUR NEO-CON AND NEO-LIBERAL GOVERNORS!
THIS IS HOW WALL STREET MOVES ALL REAL ESTATE TO THE RICH AND TAKES ALL PUBLIC WEALTH AS IT GOES!
Did Republican Larry Hogan shout out against these kinds of taxes during his race for Governor of Maryland? Of course not---he is a Bush neo-con working for global wealth and consolidation of real estate to the rich as was Clinton neo-liberal Anthony Brown. See why it is so important that a labor and justice candidate not win a primary in Maryland?
'REITs and other investors that use leverage helped push up bond yields as they sold debt or added bearish bets on Treasuries as hedges, Scott Minerd, chief investment officer of Guggenheim Partners LLC, said in a July 9 note to clients.
“Rising rates will continue to reduce housing affordability, which is especially troublesome because housing is the primary locomotive of U.S. economic growth,” he said'.
Below you see all of the FED policy has been centered on REIT performance and Freddie and Fanny's supposed earnings that eliminated all of the debt from the subprime mortgage loan fraud will come back when the economy crashes next year from the same bubble creation---this time in the bond market. They keep telling us they are doing this for jobs in the construction/housing sector and for the American people to become home-owners---but it is simply Wall Street betting and profits that make a mess of home-buying and job stability.
REITs Slump 20, Fueling Worst Bond Losses Since '94
- Wednesday, 10 Jul 2013 06:52 PM
Since the May 2 comments, shares of the companies, which use borrowed money to make $400 billion in credit market bets, have dropped about 20 percent and the value of their assets has plunged after the Federal Reserve triggered a flight from bond funds by signaling plans to slow its debt-buying program.
REITs may have needed to sell about $30 billion of government-backed mortgage securities in just one week last month to maintain the amount of borrowing relative to their net worth, according to JPMorgan Chase & Co. Those types of sales deepened losses in the mortgage-bond market, which had the worst quarter since 1994, accelerated the exit from fixed-income funds and fueled a jump in home-loan rates to a two-year high.
REITs “have been one of, if not the biggest contributors” to the underperformance and volatility in mortgage bonds, said Bryan Whalen, co-head of mortgage bonds at Los Angeles-based TCW Group Inc., which oversees about $131 billion of assets.
Mortgage rates jumped to 4.46 percent at the end of June, up from a near-record low of 3.35 percent in early May, after the central bank indicated it will taper its monthly debt buying, including $40 billion of government-backed housing debt. Investors pulled about $60 billion from U.S. bond funds in June, the biggest monthly redemptions in records going back to 1961, according to estimates from the Investment Company Institute.
Firms including Annaly, American Capital Agency Corp., the second biggest of the companies, and Armour Residential REIT Inc., sell shares to the public so the capital can’t be redeemed. They also rely on leverage, typically using about six to eight times the amount of borrowed money compared with their capital.
That means they benefited from cheap financing as the Fed kept short-term interest rates near zero for more than four years. REITs more than tripled holdings of government-backed home-loan bonds since 2009 and their increased buying power helped push down mortgage rates.
Securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae have lost 2.5 percent since March 31, including 1.9 percent last quarter, trailing similar-duration U.S. government debt by 1 percentage point, according to Bank of America Merrill Lynch index data. REITs are plunging in part because the relatively worse performance of the mortgage bonds eroded the value of hedges against rising rates.
“The industry relies on leverage, and leverage cuts both ways,” said Ken Hackel, the head of securitized product strategy at Stamford, Connecticut-based bond broker CRT Capital Group LLC. “In good times it generates above-market returns. But when times get tougher, it creates challenges tied to the need to unwind it.”
The REITs, which focus on property-linked assets and avoid taxes by paying out 90 percent of their earnings, lured investors with returns of 19 percent last year and dividends in excess of 13 percent, almost twice the average yield on company junk bonds.
Annaly’s Denahan presented her shark analogy after Fed Governor Jeremy Stein referenced mortgage REITs in a February speech on how credit markets were showing signs of potentially excessive risk-taking. Media reports suggested that the Financial Stability Oversight Council, or FSOC, could call for new oversight for the firms in an annual report due in April.
Three shark attacks in July 2001 ignited a media frenzy resulting in a Time magazine cover story titled “Summer of the Shark,” Denahan said on a conference call with analysts to discuss Annaly’s first-quarter earnings.
“The lesson of the summer of 2001, the summer of sharks, is that fears rose with the level of media attention, even though there had been no actual change in the risks of shark attacks,” she said. “Mortgage REITs are going through their own summer of the sharks.” In reality, “I do not believe that the mortgage REIT sector poses a threat to the financial stability of the United States,” she said.
OH REALLY?????? SAID THE SAME ABOUT THE SUBPRIME MORTGAGE LOAN BUBBLE.
Denahan declined to discuss her comments of the performance of the REITs, Annaly spokesman Jay Diamond said this week.
Annaly, with $126 billion of assets as of March 31, grew from $69 billion at the end of 2009 and returned 43 percent, including reinvested dividends during the period. It fell 2 percent to $11.53 at the close in New York, extending its drop to 13 percent this year and 23 percent since the conference call.
The FSOC didn’t say Annaly or its rivals needed special oversight, nor did it make any recommendations for specific regulatory changes in its report released in April. CRT’s Hackel said there have also been no signs of lenders to the mortgage REITs making sudden changes in terms and rates, a risk cited by the FSOC that could create a loop of more forced sales.
The repurchase agreement, or repo markets, used by REITs to borrow have been steady, according to Kenneth Steele, chief financial officer at Winston-Salem, North Carolina-based Hatteras Financial Corp. and Byron Boston, chief investment officer of Glen Allen, Virginia-based Dynex Capital Inc.
“Even in the last few weeks, we’ve had longer-term repo offered to us,” said Steele, whose REIT invests mainly in adjustable-rate agency mortgage bonds, unlike most of its peers.
Haircuts, or the difference between collateral values and loan amounts, weren’t changing last week even amid some of the highest bond-market volatility in recent months, said Boston, who was traveling in China.
“I keep checking,” said Boston, whose REIT owns more commercial-mortgage bonds than some peers.
Still, REITs’ sales of mortgage bonds to meet margin calls and maintain leverage have “absolutely been a factor” in the slump in mortgage-bond prices, Hackel said.
Credit Suisse Group AG analysts led by Mahesh Swaminathan wrote in a July 8 note to clients that higher interest rates could trigger further REIT sales, creating a “key risk” to their recommended bet that mortgage bonds would outperform.
REITs and other investors that use leverage helped push up bond yields as they sold debt or added bearish bets on Treasuries as hedges, Scott Minerd, chief investment officer of Guggenheim Partners LLC, said in a July 9 note to clients.
“Rising rates will continue to reduce housing affordability, which is especially troublesome because housing is the primary locomotive of U.S. economic growth,” he said.
U.S. government-backed mortgage securities account for 29 percent of the Barclays U.S. Aggregate Bond Index, a common benchmark for mutual funds, meaning the debt’s performance can be influential in determining the returns seen by investors, according to data from the bank.
American Capital and Armour Residential REIT Inc., which target Fannie Mae, Freddie Mac and Ginnie Mae securities have been some of the worst performers. Both slumped more than 30 percent since Denahan’s remarks, with American Capital dropping a further 2 percent today.
American Capital President Gary Kain and James Mountain, Armour’s Chief Financial Officer declined to comment on the companies’ losses.
“The space has not been getting love,” said Jason Arnold, an analyst at RBC Capital Markets in San Francisco. “It seems like one way or the other they’ve had fears weigh on valuations. Last fall it was that rates were so low that new investment spreads were not as attractive and investors were worried about earnings and dividends. Now rates have moved up and instead they are worrying about book value.”
So, when you have a REIT investment policy that creates havoc in the stock market and creates leverage and debt for Federal, state, and local governments what do Bush neo-cons and Clinton neo-liberals do?
DOUBLE-DOWN ON REIT BY EXTENDING IT TO 'AFFORDABLE HOUSING'.
If you noticed the REIT market was crashing in 2012 as the FED neared the maximum of mortgage loan buy-backs and at that same time Obama and HARP started pushing mortgage re-financing and easy-to-get loans from HARP. They did that to boost the REIT market value ----not to give people an opportunity at home ownership. This is what created the bump in Freddie and Fannie earnings that neo-liberals then boasted were signs of a recovering economy. This scam is the mirror image of Bush's subprime mortgage loan fraud written by Wall Street and facilitated by the FED. So, all of what they call a soaring economy and policy that successfully does this IS ALL PROPAGANDA.
THEY KNOW THE ECONOMY WILL IMPLODE FROM THESE POLICIES AND THEY SIMPLY PLAN HOW TO MITIGATE THE DAMAGE TO WALL STREET AT THE EXPENSE OF MAIN STREET.
Below you see the policies tied with funding public housing 'renovations' that hand public housing off to private investors who then renovate these high-rises on public land with public money and all tied to REIT investment leverage. Remember, when the bond market crashes----all these public projects like schools, public housing, government building tied to credit bond leverage and these REITS will default. Taxpayers rebuild these properties and then hand them to private investors that then pay no property taxes starving government coffers. See why Mike Miller and the Maryland Assembly are going to stop state funding of public schools at the same time all mechanisms for tax revenue is being dismantled?
Nonprofits form REITs
Investments / The Ticker
April 29, 2013 11:26AM
The nonprofits, including Mercy Housing, LINC Housing Corp. and Nevada HAND, created a private real-estate investment trust that will acquire apartment buildings across the country, mainly in communities where rising real-estate values have prompted landlords to turn low-income housing into housing for the middle class or affluent.
The REIT, called the Housing Partnership Equity Trust, is the nation's only real-estate company owned and operated by nonprofits and the second REIT to focus on affordable housing.
When the world's economy crashed with the subprime mortgage loan fraud it was largely tied to this REIT policy expanded around the world. REIT is the reason Asian markets filled with these toxic loans and REIT is why Asian markets are buying the FED's mortgage buyback bonds.....in each case, these policies implode economies but Wall Street trains these Asian investors to use the same protections for the rich losing money as is used here in the US. So, this imploding bond market will crush the US economy and create a recession/depression----but the rich will be insured against loses with Credit Default Swaps/derivatives. Wall Street thinks this is successful policy so your Clinton neo-liberal keeps creating laws to allow it and keep the US Justice and State Justice departments from investigating and prosecuting for crimes against the American people. This is the source of wealth inequity around the world and it keeps the world's citizens from being able to gain and hold any wealth.
You see the motivation behind all of the office space that appeared in the last two decades. European nations like Spain was swamped with office space that was useless as was the US. REIT is tied to real estate investments and 75% of the wealth in real estate has to be tied to real estate. This policy has as a goal of moving real estate to the rich as these office buildings go bankrupt, foreclose, and are bundled for sale to huge investment firms. THAT IS THE PLAN SAY CLINTON NEO-LIBERALS!
Did you know that Clinton neo-liberals only represent less than 20% of the Democratic Party----GET RID OF THEM BY RUNNING AND VOTING FOR LABOR AND JUSTICE IN ALL PRIMARIES!
Local Reits register solid returns for 2014
Grace LeongThe Straits Times
Monday, Dec 29, 2014
2014 has been a relatively solid year for the local real estate investment trust (Reit) sector, although prospects of higher interest rates next year could result in more volatility in Reit unit prices.
The 28 Reits listed here have a total market value of $59.7 billion and averaged year-to-date total returns of 12.9 per cent.
Indicative dividend yields averaged 6.1 per cent, according to a report by SGX My Gateway on Wednesday. The Reits also have posted an average price gain of 6.3 per cent so far this year, the report said.
A year ago, the 25 Reits listed had a total market value of $50.5 billion, while indicative dividend yields averaged 6.1 per cent.
The FTSE ST Reits Index, which tracks 33 local trusts, has had total returns of nearly 16 per cent so far this year, outperforming the Straits Times Index's 7 per cent gain. This compares with a drop of 4.5 per cent a year ago.
Despite the US Federal Reserve's dovish stance on monetary policy at its meeting last week, a hike in the Fed Funds target rate is expected by the second quarter of next year. "This would likely influence the Singapore Government 10-year bond yield and Sibor to increase, and could result in volatility in the share prices of S-Reits," OCBC Investment Research noted in a report last week.
But most Reits have buffered up their balance sheets to keep gearing ratios at relatively comfortable levels, and have also put in place hedging strategies, OCBC said.
Trusts here have been tightening their belts on expectations that interest rates could rise over the next few years, which would have major repercussions as borrowing costs are a major component of their expenses.
While the brokerage has maintained a neutral call on the sector, it is overweight on office and retail Reits. It has buy calls on CapitaMall Trust, Frasers Centrepoint Trust and Starhill Global Reit.
Reits are popular among investors as they can offer higher yields than regular property stocks through tax-exempt dividends and a requirement to distribute at least 90 per cent of taxable net income to unitholders.
MayBank Kim Eng, which has a buy call on CapitaCommercial Trust (CCT), cited "23 per cent of pre-commitment leases signed to date for CapitaGreen, and GIC renewing leases at Capital Tower next year with significant rental reversion".
"GIC (CCT's top 10 tenant contributing 5 per cent of monthly gross rental income) will be renewing its leases at Capital Tower next year, with significant reversion, given its low base, according to management. CCT stands to benefit from higher office spot rents given its favourable lease expiry profile," the brokerage said.
It also said CCT's balance sheet remained strong, "with a low gearing of 28 per cent, and 80 per cent of borrowings are on fixed rates".
Its portfolio occupancy also remains strong at 99.4 per cent.
Meanwhile, OCBC downgraded its call on Suntec Reit to a "hold", saying it is expected to be "a beneficiary of the robust momentum in Singapore's prime office sector, although rental growth is likely to moderate from 2015".
"The momentum for prime office space in Singapore remains robust, as illustrated by the 3.3 per cent quarter-on-quarter and 14.7 per cent year-on-year increase in grade A rentals in third quarter 2014, based on data from CBRE.
"Notwithstanding this positive environment, we believe the pace of rental increase would moderate next year. Growth is expected to ease further in 2016, given the large pipeline of supply coming on stream," the brokerage said.
"The situation appears less sanguine for Suntec Reit's retail segment which, in our view, is underpinned by headwinds facing Singapore's retail sector. This has resulted in the relatively lacklustre committed occupancy rate of 60 per cent (as at Sept 30) for Suntec City Mall's Phase 3 development. We see downside risks to our full year 2015 gross revenue and distribution per unit forecasts if the situation remains sluggish," it said.
You can bet that with REIT being a huge factor in Maryland and especially Baltimore development that these corporate pols that work with Baltimore Development Corporation and Johns Hopkins think they are getting in on the bottom floor of some real money by being insider trading investors in these deals moved by the Maryland Assembly and Baltimore City Hall. The truth is----they are being suckered into selling out their constituents and the communities they represent for this affluent development and will end up losing it all as these investments are made worthless for anyone but the richest.
This is why I shout to Maryland pols working to dismantle all that is public and Rule of Law-----
YOU WILL LOSE IN THE END----DON'T GO THERE!
Think about AIG and now PIMCO imploded for the sake of these real estate deals----if you are a politician thinking you have an inside track----especially at the state and local level----you are being duped! Think about PIMCO CEO arranging his departure with policy that will leave its shareholders with the costs of revenue obligations!
American Realty Capital REIT Puts Sale Process In Motion
by REIT Wrecks » Fri Apr 08, 2011 11:47 pm
American Realty Capital Trust Inc. announced today that it was exploring "strategic alternatives" which is PR jargon for organizing a yard sale. This is American Realty Capital's flagship REIT, and for a firm that prides itself on transparency, it's unclear why this news was floated in a press release that is reflected neither on American Realty Capital's website nor in an SEC filing. Perhaps they'll get around to notifying shareholders and advisors at some later date.
American Realty Capital Trust Inc. is ready to explore liquidity options in light of a pending July 25 close of its initial public offering. Since the IPO launch Jan. 25, 2008, the company has grossed $885.2 million. The REIT's adviser, American Realty Capital Advisors LLC, plans to start interviewing investment banking firms and other advisory firms to develop a strategic action list for its board, aimed at maximizing shareholder value. Source: Business Wire
With this news, it now seems that the increase in restricted shares available to management that was detailed in the Rational Realist earlier this week was quite pre-meditated, and the ridiculously low performance threshold was very purposeful.
Most important, the windfall they apparently engineered could result in up to $40 million being skimmed from the sale proceeds by the time the public offering closes in July. Nobody should oppose lucrative management compensation packages in return for maximizing shareholder value, but this is $40 million that would have otherwise been paid to the REIT's true owners, and the performance bar for earning this jackpot is comical.
This is quite an about-face from 2010, when American Realty Capital waived its internalization fee citing a performance-oriented culture ("Aligning interests between management and shareholders means tying advisor pay to performance"). The fee waiver served its purpose well. In 2009, before the fee was waived, ARC REIT had raised just $132 million in gross proceeds, including proceeds from the DRIP. In 2010, after the fee was waived, ARC raised over $450 million in gross proceeds. Unfortunately, it turns out that waiving the internalization fee was just a cynical sales tactic, and this recent increase in the restricted stock grants is the mother of all clawbacks.