Yesterday, I have to report on a commercial REIT that I have been looking for sometime. When I first heard of the mortgage crisis, I thought it only affected the residential market. People took out too big of a loan, and they had to foreclose or go bankrupt on their houses. The others were investors trying to make a quick buck took out 5-year ARM loans instead of the normal 30-year fixed rate, and when real estate prices started dropping, their investments turned stale. It’s easier to foreclose or go bankrupt then pay off a half million dollars on a worthless house.
Well, let’s hope the residential bottom out at the beginning of the year and it will finally stop bringing down commercial real estate with it. RSO, a commercial REIT, is close to hitting a new low, but I think it’s due to move up for now. It’s around $6.50 with a dividend yield of 20%. The stock has had minimal exposure to the mortgage crisis, but it has been taken hold with the other REIT stocks because the sector that it is in. I highly doubt they will go bankrupt. If you look at their financials, you will notice that mose of it’s real estate is pretty stable. I doubt the 6.48% drop has anything to do specifically with this stock, but the sector. I’d suggest a buy if you are a long-term holder. You get a nice fat dividend as you wait for it to move back up.