Bookkeeping: Adding ProLogis (PLD) to my Basket of REIT Shorts

Submitted By Trader Mark
Slowly but surely building this CRE basket [ing-to-build-reit.html">Mar 13: Bookkeeping - Beginning to Build a REIT Short Portfolio] - this is name #4; but unlike the others this one has more of a focus on industrial rather than retail: ProLogis (PLD). Starting a 1.4% stake just north of $7 as the stock is up 9% as "worst is first" is the order of the day. After taking some profits yesterday morning in the group [Taking Partial Short Profits] I've expanded the basket back today in this very volatile group. This takes our short exposure back up to near 5% for the "basket". Again, I've been shorting this sector since fall 2007 and I believe 2009/2010 wil be to commercial real estate what late 2007 and 2008 was to financials. Except mother government won't be buying preferred stock to keep zombie REITs alive. But we must expect massive volatility in the group and if the market goes on a new run to say S&P mid 800s we'll have to cut back for a while to avoid heavy losses.

With something like Prologis, I'll be covering part of the position on moves down below $6 and add north of $7 and keep repeating. This will be a long term hold...

ProLogis operates as a real estate investment trust in the United States. It owns, operates, and develops industrial distribution properties in North America, Europe, and Asia.

The latest from Reuters

The U.S. commercial real estate market is bad and investors expect it to get a whole lot worse, according to a closely followed survey by PricewaterhouseCoopers.
As investors painfully watch the value of their assets decline, many feel troubled knowing that the ills of the U.S. economic recession have yet to fully impact the commercial real estate industry," starts the first-quarter Korpacz Real Estate Investor Survey of more than 100 investors from real estate investment trusts, pension funds, private equity firms and insurance and mortgage companies.
Many investors are struggling with ways to preserve the value of their investments and maintain ownership in the wake of restricted debt sources, declining tenant demand, and falling values, the survey said.
Real estate investors do not expect the commercial real estate sector to rebound until well into 2010 at the earliest, according to the survey. (try 2011) "Investors are not expecting this recovery, when it does happen, to be a sharp recovery where it hits bottom and bounces up," (agree) "It's going to be a very slow sluggish recovery," she said.(agree) "There are just too many things right now that are impacting the industry to make investors very confident about what's going on," she said.
Some property owners are lowering rental rates and increasing concessions, which results in lower revenue. Compared to a year ago, the average amount of free rent landlords are offering has increased to six month in several major office markets, such as Boston, where it rose from 2.15 months; Manhattan, where it grew from four-and-half months and San Francisco, where increased from three-and-half months, the survey said.

Short ProLogis in fund; no personal position

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