I’ve been reading for the past couple weeks about the real estate industry and the general sentiment I identified is that there is still more pain to come, especially with the commercial real estate sector. Retailers are not able to sell their products and are not able to keep up with rent.
Another consideration is that there is now a growing trend that REITs are paying their dividends in STOCK, not cash. I am very wary of any company that starts to pay dividends in stock rather than cash. It seems to me that when a compay starts doing that, they are in dire trouble.
So, after identifying what I think is the general sentiment (more of the pain train is still coming for commercial real estate) and the fact that REITs are paying dividends in stock, I initiated a position in SRS, an etf from Proshares that shorts the real estate sector. Then, Simon’s Property Group (SPG) last week reported that they would be paying their dividend in stock. SPG is the country’s largest mall and shopping center operator. I doubled my SRS position upon this news.
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