REITs Continue To Be Battered

Stocks in Shanghai were down 4.5 percent overnight as investors seemed disappointed about the rate cuts announced yesterday by the People's Bank of China (they cut their benchmark lending rate by 27 basis points to 5.31 percent and also cut its reserve requirement).


1) Industrial REIT ProLogis up 12 percent, said it was selling its China operations and a 20 percent interest in its Japan property funds to GIC real estate for $1.3 billion. They will use the proceeds to reduce debt. Like many REITs, ProLogis has been looking to reduced leverage, including buying back debt. REITS have been battered as they have had a hard time refunding debt coming due.

2) Swiss bank UBS up about 8 percent as they confirmed they received a $1.8 billion loan from a consortium of Swiss mortgage institutions.

3) Nortel up 7 percent as they have reportedly received three offers worth nearly $1 billion for their Metro Ethernet unit. The company has been considering selling several divisions.

4) The VIX (Volatility Index) closed yesterday at the lowest levels since late September. However, traders tell me that VIX futures for January and February remain high, indicating traders are anticipating that volatility could return in the coming months.

5) We will get new and existing home sales for November this morning; unfortunately the inventory-to-sales ratio for October new homes remained stubbornly high, at about 11 months supply.

6) Interesting story in FT this morning about how unprepared the mortgage business is for...more business. Lower rates in the past weeks have resulted in a tidal wave of refi applications. Only problem is the industry laid off tens of thousands of loan officers when business fell off a cliff earlier in the year.

    • Economy Shrank 0.5% as Businesses Cut Spending

- The Dow 30 at a Glance

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