REIT shares are tumbling as liquidity issues have hedge funds reducing their REIT stakes. The ones worse for wear—like NorthStar Realty (down 39%), iStar (25%), Colony Capital (19%) and New Residential (10%)—are those with heavy hedge fund investment.
With hedge funds doing quick selloffs, REIT analyst Trevor Cranston says it takes time for others to step up their stakes and stabilize the REIT's valuation.
New Residential CEO Michael Nierenberg sees the change as a long-term positive, telling Bloomberg a smaller concentration of hedge fund capital means more stability with shareholders. “For us, the underlying fundamentals of our business continue to be very good,” Nierenberg says. “Markets like this create great investing environments.”
The rapid selloff comes with hedge funds promising unrealistic liquidity levels to investors—to the point where funds unable to deliver have had to put a moratorium on investor redemptions. [Bloomberg]
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