![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGY3TQEZlBD-557YoOyWww3MGb-r79MrghBYlrPv3MwVZ_rNuZA1QkNchWQywqOit23ADLiio8C06fg6CJNb25MUQTCvdxewlOHdo_K8Zlj6jz7hypA8nyPS7UQVfk35wE3z8Vg07nWeKq/s400/gsreits7.jpg)
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhC5KJDTWcU__dEZ2knPZM8HDvI9hWh2bbGjpAzCa1fMiMi8cA6AHfC_x3DuD8wwLf7fJX-BuhJ8TGrg1LzVtlZkqNIaYD3dhS9rPgrPiJrl13VhoM3pd8KtQDoABGp_XvTGh3Cnx0MPuoz/s400/gsreits5.jpg)
Additionally, GS is expecting a dramatic rise in cap rates: in the neighborhood of up to 500 bps:
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgDTh9SHxffRxux3ieXyGMRwSK0HBJGy19lzVQ42Z3kj1_hy3-nmyHIfFLe9ZdmcrEXCf3_kBucFHbatpVYaa2AhO367MDpIeScJlqTgK9R3lO_Pts5p0rdLe_555JUihMrmnT9DnUgBFMH/s400/gsreits6.jpg)
The core of the problem for REITs and the entire CRE space in general is the rate of vacancy increases across different sectors. This one would be a doozy for the government to "intervene" in unless it decided to spill its employees out of DC and have them populate New York's midtown, all the while paying peak-market, 2005 rents.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgG569cMqj5ATFc2nFXo9uExKe7zN6YUm2icusr2vC6gdkir6cuh6CUCc4fk5b9hHLi0qnbRGHNEqLkoFyorCWwpiwPJqDmgYsxbA-f6ENY7YL6WYxW096gRIvyfFCMJYgmJN9bk7KTVJws/s400/gsreits4.jpg)
Lastly, Zero Hedge's approach at REIT scatter-bubble charting seems to have found fans. An moving chart from Goldman evaluating a whole lot of three-axial data.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxZgxF0C_3B6SYygrhYgzAynwfM9r7ljBd1YyykK9Y0oFdcCViEzbSu5ls6ZPxBk6gyy_pBLZ2dybflUxqTt4g_jnpiZ6zqD8A8ur0oyEhXxNMKKAhBT4pnltxevwBGfydbLK9RDJ5pgIv/s400/gereits2.jpg)
1 comments:
Great stuff, i was just putting together a REIT piece for my clients but GS beat me to it re cap rates. In the 1990s cap rates rose to the 9-10% rate in certain areas yet sellside is still using 6-7% cap rates for NAV calcs.
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