A soft landing is still a landing – and CGM Realty Fund’s Kenneth Heebner is preparing to roll with it.
He serves as portfolio manager at the fund, which has been warily watching the real estate market’s more moribund developments – such as the sudden glut in unsold condominiums in cities like New York, Boston and Washington, DC. (some 2,500 proposed condos in the DC area have been scrapped)
As the New York Times article linked above points out--nationally, condominium sales have fallen further than those of single-family properties--13.6 percent from November 2005 to the same month in 2006--and free-standing homes showed a 10.7 percent decline in the same period.
But Heebner told “Street Signs” that CGM is not fleeing the urban markets – it is merely shifting sectors. Thus, the strategist declared that “one REIT [real estate investment trust] we like is SL Green.” He underscored the firm’s emphasis on commercial development, predicting that office-building construction in Manhattan will continue to be muscular.
On the same day that news broke that U.S. home-builders like Centex and KB Home face losses and charges, Heebner pointed to two international plays: Las Vegas Sands, currently developing the Cotai Strip in Macao – the “Vegas of the Pacific” – and south-of-the-border Homex, which he calls a beneficiary of a Mexican real-estate arena resembling the U.S. market “40 years ago.”