Commercial Real Estate Is Still Shaky (1 REIT to Avoid)

This sector is facing some massive headwinds… Published By Money & Markets, LLC. January 22, 2024 Published By Money & Markets, LLC. January 22, 2024 [Turn Your Images On] [Turn Your Images On] From The Desk of [Matt Clark, CMSA™]( Chief Research Analyst, [Money & Markets]( Editor’s Note: Welcome to the first issue of Money & Markets Daily! In today’s issue, Chief Research Analyst Matt Clark is going to highlight a troubling trend that Wall Street is seemingly ignoring. Before you read on, take a moment to vote in [our survey here]( if you haven’t already. It’s going to help us make this newsletter even better from here… [Commercial Real Estate Is Still Shaky (1 REIT to Avoid)]( Stock Power Daily, In March 2020, our entire South Florida office was sent home. The COVID-19 pandemic was spreading and offices everywhere were closing in favor of remote work to curb the outbreak. Fast-forward to today and the impacts of this mass office exodus continue to affect commercial real estate. Despite CEO’s best attempts to bring workers back, office space utilization in the U.S. is still only around 50% of [pre-pandemic levels](. Today, I’ll dive into how the commercial real estate sector is dealing with this trend and use Adam O’Dell’s proprietary Green Zone Power Ratings system to show you one stock to steer clear of. More Headwinds in 2024 The way commercial real estate finance works is simple. A business entity or investor takes out a loan, buys a property, leases out space and collects rent from its tenants. A lot of the time, the rents collected are used to pay down the debt incurred from the loan to buy the property. December 2023 was a telling month in commercial real estate finance. [Turn Your Images On] Mortgage Bankers Association data shows the delinquency rate for mortgages backed by commercial real estate jumped to 6.5%. The report said loans backed by office properties spearheaded the increase. This means more mortgages backed by commercial real estate were delinquent by 30 days or more in December than in November. Wall Street is only starting to take notice of this alarming issue: [Turn Your Images On] Investors are increasing short positions in some real estate investment trusts (REITs) because of this trend. Of the 10 REITs with the largest increase in short interest, S&P Global reported four were office REITs. This means that investors are betting against strong performance from these REITs. But Wall Street is overlooking the bigger picture because overall short interest in office REITs dropped from 5.8% in November 2023 to 5.6% in December. Using Adam’s Green Zone Power Ratings system, I’ve found one REIT that you should definitely stay away from … or even short. --------------------------------------------------------------- [Turn Your Images On]( [#1 Stock for Energy Crisis (Buy Now for Just $8)]( As the world suffers an oil shock… And gas prices rip higher… One tiny company could have the answer to the global energy crisis. It’s using AI to crack open the largest untapped energy source on the planet… 5X larger than the biggest oil field on Earth. [Act fast, this $8 stock could be moments away from appreciating considerably.]( --------------------------------------------------------------- Peakstone Realty Trust: A REIT to Avoid The REIT with the largest increase in short interest is Peakstone Realty Trust (NYSE: PKST). It has a portfolio of office and industrial properties across the U.S. — with properties in Las Vegas, Denver, Nashville, Charlotte and the Raleigh-Durham area of North Carolina. According to S&P Global, traders are shorting 6.4% of PKST’s shares— an increase of 4.2 percentage points from a month ago. [Turn Your Images On] Overall, PKST rates 2 out of 100 on our Green Zone Power Ratings system. That means we consider the stock “High-Risk” and expect it to underperform the market over the next 12 months. The stock rates in the red on five of the six factors. Most notable is its 2 on Momentum. After reaching a recent high of $21.17 at the end of December, the stock has been in free-fall — dropping 26.6% to $15.52. The stock is down more than 67% from its 52-week high set last year. Bottom line: Efforts to bring American workers back to the office have largely fallen on deaf ears. That spells trouble for investors and property owners who are now stuck with a hefty loan and fewer tenants to pay it. I don’t believe this is the last we hear of commercial real estate falling on hard times … it’s just the beginning. Since Wall Street hasn’t picked up on the message that commercial real estate is in trouble, you can use the Green Zone Power Ratings system to stay ahead and steer clear of this falling trend. Until next time… Safe trading, [Turn Your Images On] [Matt Clark, CMSA™]( Chief Research Analyst, [Money & Markets]( --------------------------------------------------------------- Check Out More From Money & Markets Daily: - [WHY COIN STOCK RATES BEARISH AMID THE CRYPTO TREND]( - [FUNDAMENTALS POINT TO $96K BITCOIN]( - [THE NEW BITCOIN ETF SENT THESE STOCKS SOARING]( --------------------------------------------------------------- [Turn Your Images On]( Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482. To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or [whitelist]( within your spam settings. For customer service questions or issues, please contact us for assistance. 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Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication. (c) 2024 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. 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