Housing Bubble and Real Estate Market Tracker Posted on Jul by bigpoppamust


									Housing Bubble and Real Estate Market Tracker
Posted on Jul 17th, 2007 with stocks: ASD, BZH, CHCI, FIC, FNM, FRE, GBE, HCN, HOV, IFSIA, KIM, LEH, MSW,
                        Judy Weil submits: Here's our summary of articles and data points on the housing

                        market. It's part of Seeking Alpha's coverage of the real estate market and homebuilder

                        stocks. Like all other topics and stock coverage from Seeking Alpha, you can have this

                        sent to your Blackberry or desktop email by signing up for our no-spam free email

                        subscription service.

Quotes of the Day- "From the House's Mouth"

"'08 is probably not going to be a year of strong recovery. Our hope is that it stays no worse than we are

today. We're not predicting any significant recovery." - Larry Sorsby, executive VP and CFO of Hovnanian

Enterprises (HOV).

"I think there ought to be regulation of subprime. I think there ought to be regulation of prime. I don't think

that the economy is best left to its own devices almost ever. The excesses that are permitted in the

mortgage industry can and perhaps have led us into a dark hole."- Robert Toll, Chief Executive of Toll

Brothers (TOL)

(Seeking Alpha, July 16th)

Real Estate Sales and House Prices

q   Local Housing Prices Decline (The Columbian, July 17th) Washington: "Clark County home values showed

    signs of softening in June for the first time in more than five years with a 2.8% decline in home prices from June

    2006. At $259,900, the median price of all new and existing homes sold here in June 2007 was lower than the

    June 2006 median home price of $267,500... according to… Riley & Marks appraisers in Vancouver… Total

    home sales were also lower last month than in 2006, dropping by 21.9%. A total of 813 new and pre-owned

    houses were sold, down from 1,041 home sales in June 2006."

q   Southern California Home Sales Still Slipping (Square Feet Blog, Mercury News, July 17th) San Jose:

    "DataQuick, which provides home sale information for markets around the country, released Los Angeles-area

    numbers for June today, and for San Diego yesterday. Sales volume was off by 50% in San Bernardino County

    last month compared with June 2006 (which was already down from 2005), to mention the most extreme

    example of the slowdown. Sales in LA County were down about 33%. The same thing is happening there that

    is occuring here: Many fewer homes in the lower-prices areas are selling. That means median prices aren't

    falling anywhere near as much as the values of some individual homes are."
Real Estate Investing and Sentiment

q   Bernanke Chips Away at Greenspan's Free-Market Legacy (Bloomberg, July 17th): "Barney Frank, a

    Massachusetts Democrat: "The Fed has the authority to spell out rules about what is unfair and deceptive. If by

    default the Fed is not in the process of doing it, we, I think, should pass a law giving the authority to other

    agencies…" Democratic Representative Charles Wilson of Ohio: "The Fed is doing a good job in many ways,

    but regulating isn't one of them… We need to find a way to do it if the Fed doesn't step up. There are a lot of

    predatory loans that are absolutely wrecking people's lives.''

q   Real Estate Guru To Head CSU Center (Rocky Mountain News, July 16th): "Colorado State University…

    announced the appointment of Steven P. Laposa, currently director of the Global Strategic Real Estate

    Research group at PricewaterhouseCoopers… to act as director of the Everitt Real Estate Center at the

    university's College of Business. Laposa is a 26-year veteran of project management, real estate development

    and research experience throughout the U.S., and also has experience in the Middle East, Europe, Africa and

    Asia… He will maintain a working relationship with PricewaterhouseCoopers that will support his role in the

    College of Business."

q   Real Estate Information From Yahoo and Google (Mercury News, July 16th): "[Some] online real estate-related

    features offered by Yahoo and Google… Search for-sale homes listed on the Multiple Listing Service

    (presented by brokerage Prudential California Realty), in the Yahoo classified ads [and] search apartment

    listings from Apartments.com., ApartmentRatings.com and other sources [Yahoo]… Google: Courtesy of a

    partnership with RealtyTrac: Search for homes in foreclosure [or] repossessed by lenders… Create a custom

    map of real estate listings on Google Maps… which draw listings from Google's [classified ads] with a database

    of listings from sources [like] realty brokerages and MLS's… Real estate videos on Google… Home valuations,

    neighborhood and school information on Yahoo."

q   Tipping Point for Trulia? (Future of Real Estate Marketing, July 16th): "CNNMoney has done something new by

    incorporating Trulia’s search engine into the site to power the homes for sale function. Readers can search real

    estate city by city or from any page on the site through a search widget… This is a pretty big win for Trulia. One

    of the site’s biggest weaknesses, is that it suffers from a lack of widespread consumer brand awareness.

    Outside of Internet-savvy home buyers and real estate 2.0 professionals, very few people I talk to have even

    heard of the site… This could be a huge traffic driver to their site."

q   Feds Find No Anti-Trust Problems With NNN Realty-Grubb & Ellis Merger (OC Register, July 16th): "The U.S.

    Justice Department and the Federal Trade Commission cleared the way for NNN Realty Advisors to merge with
    Grubb & Ellis Co. (GBE) and move the commercial brokerage's headquarters from Chicago to Orange

    County… The merger still is under review by the SEC and requires shareholder approval... NNN Realty

    Advisors, which channels investor money into commercial real estate through tenancy-in-common deals and

    through several real estate trusts, had been seeking to go public before reaching a merger agreement with

    Grubb & Ellis. NNN Realty Advisors is essentially taking over Grubb & Ellis and becoming a publicly traded


Mortgates and Real Estate Lending

q   FICO ‘08 - We Live In A Credit Score Driven World - Get Ready For A Major Change (Carolina Newswire, July

    17th): "About 60 million consumers will be affected by plans to roll out a new credit scoring formula in

    September by Fair Isaac Corp. (FIC), the developer of the widely used FICO score… Major credit reporting

    agencies (Equifax, TransUnion & Experian) [are] expected to adopt the new scoring model in early fall [or] by

    the middle of 2008. Out of the 50 top financial institutions in the country, 40 rely on your FICO score to decide if

    your loan should be approved and often to determine your interest rate. The changes [are in response to]

    lender concerns over “piggy backing", a form of credit renting."

q   Countrywide Reports June 2007 Operational Results (PR Newswire, July 16th): "Mortgage loan fundings for

    the month of June totaled $45 billion, an increase of 4% from June 2006. Commercial real estate funding

    volume for June was $814 million, up 75% from June 2006. Average daily mortgage loan application activity for

    June 2007 was $3.1b, up 15% from June 2006. The mortgage loan pipeline was $69b at June 30, 2007 as

    compared to $65b at June 30, 2006… Securities trading volume in the Capital Markets segment of $450b for

    June 2007 was 40% higher when compared to June 2006."

q   PMI Canada Receives Government Guarantee (CNW Telbec, July 16th): "PMI Mortgage Insurance Company

    Canada (PMI Canada), a subsidiary of The PMI Group, Inc. (PMI), announced [that] the Canadian government

    has guaranteed payments on 90% of PMI Canada's conforming mortgage insurance obligations in the unlikely

    event of insolvency. The government guarantee allows PMI Canada policyholders that are federally regulated

    financial institutions to receive regulatory capital relief under current capital standards administered by the

    Office of the Superintendent of Financial Institutions. PMI Canada offers loan-level primary mortgage insurance

    for residential mortgages and portfolio insurance applied to pools of mortgage loans. PMI Canada has a

    financial strength rating of AA from DBRS."

Subprime Fallout and Foreclosure Impact
q   Alliance Bancorp, a Mortgage Lender, Files for Liquidation (NY Times, July 17th): "Alliance Bancorp, a

    residential mortgage lender based in Brisbane, Calif., has filed for Chapter 7 bankruptcy and will liquidate its

    assets. The company listed assets and debts of more than $100 million each in its bankruptcy petition... In a

    Chapter 7 case, a trustee is appointed to liquidate a company’s assets. It differs from Chapter 11, which allows

    a company to protect itself from creditors and reorganize through a bankruptcy court… Alliance Bancorp,

    formerly the United Financial Mortgage Corporation, specialized in lending to so-called Alt-A borrowers:

    mortgage borrowers with credit between those of prime and subprime borrowers."

q   Subprime Lender NovaStar Gets $150 Mln Infusion (Reuters UK, July 17th): "NovaStar Financial Inc. (NFI), a

    struggling subprime mortgage lender, said on Monday it will receive up to $150 million of capital from…

    MassMutual Capital Partners LP and Jefferies Capital Partners IV LLC. [The two] bought $48.8m of convertible

    preferred stock, and committed to invest up to $101.2m in a subsequent rights offering. NovaStar said the firms

    may eventually get a 17.5% equity stake. Each will get a seat on an expanded eight-person board of

    directors… and a second if the board expands. NovaStar said it will also distribute $157m in preferred

    securities as a dividend, and conduct a 1-4 reverse stock split."

q   Ameriquest Borrowers Can Apply For Money (Memphis Commercial Appeal, July 17th): "Customers of

    Ameriquest Mortgage and related companies finally will get a shot at settlement money… In Tennessee, 5,690

    borrowers will be eligible for up to $2.7 million -- an average of $476 each -- as part of a $325m January 2006

    agreement between attorneys general of 49 states and Ameriquest. In Arkansas, 1,460 loan customers will get

    as much as $670,000 and 2,209 Mississippians may recover up to $858,000 if all chose to accept the

    settlement, officials in those states said… Ameriquest companies do most of their business in the subprime

    market to less than high credit rate borrowers."

q   Moody's and Standard & Poor's Faux Subprime Downgrades (George Gutowski in Seeking Alpha, July 16th):

    "When a subprime borrower defaults, he/she defaults on the entire mortgage… Some pools may hold the more

    senior portions of the mortgage, so they will eventually recover most if not all of their capital… Investors in the

    lower strata will [also] have to worry about market value erosion and whether there is a sufficient equity

    cushion… The individual [loan tranche] ratings are truly nonsensical… The housing business will also continue

    to slow because so many repo houses will be available and savvy buyers will want the bargains, not the brand

    new fancy stuff. Some hope for hardware companies as the repos will need some fixing up."

q   Subprime Troubles A Plus To "Agency" MBS –RBS (Reuters, July 16th): "RBS Greenwich Capital:

    Delinquencies, foreclosures and downgrades on bonds backed by subprime mortgages may steer investors to

    securities issued by government-chartered Fannie Mae (FNM) and Freddie Mac (FRE) for their higher quality.
    Mortgage-backed securities issued by the two companies and by Ginnie Mae may get a boost as yields on

    safer U.S. government bonds fall to unattractive levels, they said. The benchmark 10-year Treasury note yield

    fell by 5 basis points on Monday to 5.05% after a host of subprime loan downgrades last week chipped away at

    fragile sentiment."

q   Government Advisory Panel Told More Subprime Defaults May Be On The Way (Forbes, July 16th): "Michael

    Shea, executive director of ACORN Housing Corp., warned members of the FDIC Advisory Committee on

    Economic Inclusion that his group believes more subprime defaults would occur as interest rates are increased

    for some lenders for the second time. Shea said his group, which is aimed at helping low and moderate income

    families own their own homes, is 'extremely concerned' about defaults in California, in particular."

q   Treasurys Rally As ABX Shows Subprime Weakness (MarketWatch, July 16th): "Treasury prices rallied

    Monday, pressing yields lower, after an index that measures weakness in the subprime mortgage sector

    showed further deterioration of loans made in late 2006. The ABX "BBB" 07-1 index, which gauges risk in the

    subprime mortgage lending industry, sank to near-record lows [around 44] in midday trade, amid persistent

    worries about deteriorating mortgages... The index measures the performance of loans made during the

    second half of 2006, when many home purchase loans were made to buyers with shaky credit standings. The

    benchmark 10-year Treasury note closed 13/32 higher at 95-26/32 with a yield."

q   Foreclosures Keep Tight Grip (Denver Post, July 15th): "For every two existing homes sold in the Denver metro

    area during Jan.-June, 2007, another went into foreclosure. Despite predictions that foreclosures would level

    off this year, new filings rose 26% in the metro area in Jan.-June, 2007 compared with the same period in

    2006. The 12,085 filings represent nearly half the 25,513 existing homes sold during that period… In Adams

    County, new filings are rising at a 48% pace [from] 2006. Arapahoe and Weld counties [rates] are rising at

    about a 30% pace. Douglas County, once viewed as immune, new foreclosures filings raced ahead 38% in Jan-

    June 2007."

Global Impact and Alternatives To The Housing Slump

q   Hawaii's Prospect Battles Japanese REIT's Founder (Bloomberg, July 17th): "Prospect Asset Management

    Inc., a Honolulu-based fund with $2 billion invested in Japan, wants the REIT FC Residential Investment Co's

    founder. to step aside… FC shares plunged 40% last week after it slashed its profit forecast. FC has said it

    won't give up the REIT, in which Prospect is the biggest shareholder… Prospect and Morgan Stanley (MS) are

    among overseas companies piling into property after land prices rose in 2006 for the first time in 16 years.

    Prospect has endangered the trust's tax breaks by raising its stake in the REIT this year."
q   Lehman Recruits Robeco Pair For Real Estate (Financial News, July 16th): "Lehman Brothers Asset

    Management, the funds arm of the investment bank (LEH), has hired two portfolio managers, Frank

    Onstwedder and Bas Eestermans, from Rotterdam-headquartered Robeco as… portfolio managers in its global

    real estate securities team. They will develop the bank’s global REIT strategy, reporting to Steve Brown,

    managing director and portfolio manager in the global real estate securities group, and also to Robert Sargent,

    head of asset management in Europe. The strategy will link up with a US Reit, which is run out of New York

    and lead managed by Brown."

q   Formica Corp. Acquired By New Zealand Company (Kitchen & Bath Design News, July, 2007): "Formica Corp.,

    the… surfacing materials manufacturer, has been acquired by Fletcher Building Limited, a publicly-traded New

    Zealand material and construction company… for $700 million with additional deferred payments of up to

    $50m... Formica Corp. will retain the South America operations and certain real estate in California, the

    companies said. Fletcher Building Limited, with annual revenues of $4 billion, has five operating units:

    Laminates & Panels (principally involving Laminex, which currently owns the rights to and sells under the

    Formica brand in Australia and New Zealand), Building Products, Steel, Infrastructure and Distribution."

Macro Impact, And Will The Housing Slump Cause A Recession?

q   Impacts of the Housing Bubble: Death By Plastic (Daily Reckoning, July 17th): "Dr. Housing Bubble figures that

    the Fed and the banks providing unlimited amounts of money to create the real estate bubble… has created $5

    trillion in “bubble wealth”. The significance of this is that “$5t in bubble wealth has created an extra $250 billion

    in consumption that would not be present if it were not for the housing bubble. This works out to be 2% of our

    GDP; in other words, without that wealth we would already be in a recession.”

q   Loan Spree to Come Back Against Small Banks (Wall St. Journal, July 17th): "Until recently, mid-size banks

    were eagerly doling out loans to real-estate developers looking to capitalize on soaring home prices. Today, as

    housing markets cool rapidly, banks are starting to reappraise the collateral behind those loans, often finding

    that land and property values have deteriorated… Some sizable Midwestern banks -- including Huntington

    Bancshares Inc. and Citizens Republic Bancorp Inc. -- already are warning about the declining value of their

    real-estate construction loans… SNL Financial LC: Last year, banks loaned about $565 billion for construction

    and land-development projects -- compared with $449b a year earlier and $102b in 1996."

q   First Rung On Property Ladder Gets Harder To Reach (USA Today, July 17th): "Many first-time home buyers

    are… making life-changing sacrifices, such as raiding retirement accounts, taking second jobs and moving

    back in with Mom and Dad… to scrape together money for a down payment and qualify for a loan, according to
    government and industry figures… Rising mortgage rates have eroded almost all the financial relief that buyers

    might have derived from the slight decline in prices in most areas… [And] lenders are now demanding that

    customers produce larger down payments, more cash reserves in the bank, higher credit scores and less


Homebuilders And Housing Stocks

q   Four Electrical Equipment Industry Picks (Wall St. Transcript in Seeking Alpha, July 17th): "Stephen Tusa, VP

    and Senior Analyst, electrical equipment equity research group at JPMorgan Securities: American Standard

    (ASD) is breaking up. We like the fact they are selling bath and kitchen, and [we like] the vehicle control

    business they are spinning out. The real jewel here is the commercial HVAC business, which [will] be a big part

    of a standalone company that's left over… [Few] assets out there that are as tied to energy efficiency in non-

    residential buildings as this commercial HVAC business is. We think that is a secular growth story [over] the

    next few years… I want to buy ASD now, pre-split."

q   HOV—What's Happening with Hovnanian? (Inside Futures, July 16th): "The important issue for homebuilder

    Hovnanian (HOV) shareholders is the profitability question. By some metrics, the stock seems undervalued.

    HOV has a market value of only $1.15 billion, but generated sales of $6.15b... However, the company also lost

    $30.7 million, or $0.49/share in FQ1'07. [And more losses are expected]. Yet, while the company is losing

    money… the share price will probably turn around before the company begins to post actual profits. Therefore,

    for investors [who think] the housing slump will bottom later this year or in early 2008, HOV might be an

    interesting value or turnaround play in the months ahead."

q   How to Trade on Homebuilders' Profitibility (Joseph Citarella in Seeking Alpha, July 16th): "An idea on profiting

    from the homebuilders’ continued weakness, and overselling: Buy the builders, such as Beazer Homes (BZH),

    or Comestock Homebuilding Companies (CHCI), who are trading below book value, and then short an

    appropriate amount (i.e. buy puts on) of the S&P/Case-Shiller Housing Price Index… A savvy investor can

    effectively profit from the spread/discrepancy between the book value, and the price of Beazer’s stock by

    hedging out the write-down risk via a short position in the Case-Shiller composite… I’m fairly confident that an

    inefficiency in the smaller homebuilders’ pricing exists since most investors are not considering how they can

    come close to eliminating the risk of write-downs."

q   Homebuilders Near a Bottom: Five Stocks to Benefit (Faisal Laljee in Seeking Alpha, July 16th): "The Dow

    Jones U.S. home builder index [DJUSHB] is down about 25% so far this year... Currently, it sits at a key

    support level around 550, yet some real estate and financial pundits predict that housing stocks will remain
    week until interest rates start dropping... On the other hand, stock prices of home builders usually run six

    months ahead of any long-term trend changes… I believe it's time to start picking away at some of the better

    ones… Worth buying on dips are Hovnanian (HOV), Standard Pacific (SPF), MDC Holdings (MDC), KB Home

    (KBH) and DR Horton (DHI)."

q   Interface Announces Close of the Sale of Its Fabrics Division (CNN Money, July 16th): "Interface (IFSIA), Inc.,

    a worldwide floor-coverings company, today announced that it has completed the previously announced

    transaction to sell its fabrics division, known as InterfaceFABRIC, to an affiliate of Sun Capital Partners. The

    Company said the transaction was closed on terms and conditions consistent with those previously disclosed.

    Interface… offers modular and broadloom floor-coverings... The Company is the world's largest manufacturer

    of modular carpet under the InterfaceFLOR, FLOR, Heuga and Bentley Prince Street brands, and, through its

    Bentley Prince Street brand."

q   Suburban Builder Targets NJ Cities (The Real Deal, July 16th): "A firm known for building homes in suburban

    New Jersey is moving into the state's urban areas, including development-rich Hudson County. Millennium

    Homes, which has focused primarily on suburban Essex, Morris and Union counties, has launched several

    projects in the state's cities and is planning to construct condos in booming downtown Jersey City. Jonathan

    Schwartz, the third-generation owner of Millennium, said the company is pushing into urban centers because of

    the decreasing availability of land in suburban and rural areas of the state."

q   Baby-Back Ribs, Pancakes And A Side Of Real Estate (Reuters, July 16th): "IHOP, [with] a market

    capitalization of about $980.6 million, will use securitized debt backed mostly by Applebee’s restaurant and real

    estate assets to fund the purchase of the much larger company, whose market value is $1.82 billion. IHOP,

    which franchises 99% of its 1,319 restaurants, plans to revamp Applebee’s business model away from owning

    and operating its own restaurants to becoming predominantly a franchisor. Applebee’s has nearly 2,000

    restaurants, of which 508 were company-owned. Investment Banker: “The companies may have problems, but

    the land they are sitting on still has value and the brand names still have value that can be leveraged."

q   American Standard To Consolidate Ceramics Making (Reuters, July 13th): "Heating and cooling systems

    maker American Standard Cos. Inc. (ASD) SEC filing: ASD will consolidate ceramics-manufacturing operations

    in its Americas region, resulting in roughly $10 million in charges in Q3 and Q4... ASD will discontinue ceramics

    production at its Queimados manufacturing facility in Brazil [and] relocate manufacturing of the remaining

    products to more "cost-effective" locations. [It] expects the move to eventually save about $7m in costs

    annually. The move is being taken to rebuild profitability in ASD's bath and kitchen business, which the

    manufacturer is looking to sell as part of a plan to split up the company."
Commercial Real Estate and REITs

q   Homebuilders ETF Up On Buffett Purchase Rumor (Tom Lydon in Seeking Alpha, July 17th): "The SPDR S&P

    Homebuilders (XHB) ETF increased 2.5% because Warren Buffett's Berkshire Hathaway (BRK.A) might

    purchase a stake in Hovnanian Enterprises Inc (HOV). HOV makes up 4.2% of XHB. HOV is up 9%, possibly

    because short sellers don't want to be in this market... Hovnanian has a connection to the California and

    Florida housing markets, which are especially volatile, so anything is possible. As for XHB, this small shot

    upward… doesn't change anything. XHB is down 16.9% for the year, so hopefully it can only get better...

    Imagine what can happen for this sector if it's already up based on rumors and short covering."

q   My Favorite REIT: The Washington Real Estate Investment Trust (Tyler McKinna, July 16th): "The Washington

    REIT (WRE) is a diversified trust that invests in Washington D.C.-area real estate. [With increasing]

    government employees, residential property in the area should be a solid long-term investment… As of

    December 31, 2006, the Company’s portfolio was 94% leased. Federal government tenants in aggregate,

    accounted for approximately 2.3% of the Trust’s 2006 total revenue… WRE’s P/E ratio (~38) is slightly higher

    than the industry average, but… warranted due to the quality of its earnings... The dividend yield of 5.10% is

    higher than the industry average of 4.26%... With the recent drop in [industry] share prices, WRE looks


q   Can REITs Tower Again? (Wall St. Journal, July 16th): "Some analysts and investors believe the REIT [sell-off]

    was too extreme… For a bargain hunter, a smart shopping list could include Simon Property Group (SPG).,

    Kimco Realty (KIM), Public Storage Inc. (PSA) and SL Green Realty (SLG), which have management teams

    with proven track records of boosting shareholder value and which will likely continue to benefit from strong

    economic fundamentals… [Retail REIT] Kimco… is [able] to generate fees and continue to acquire shopping

    centers despite high market prices for grocery-anchored centers… SLG trades at a significant discount to its

    net asset value… a better valuation yardstick than FFO multiples."

q   Class B Rents Continue Upward March (The Real Deal, July 16th): "Rents on Class B properties in Manhattan

    rose at a quicker pace in Q2 than rents on Class A properties, according to a report from Jones Lang LaSalle,

    continuing a trend that began in Q1'07. Average rents in Manhattan's Class B buildings went up 12%, hitting

    $51.96/sf, while Class A rents rose a more modest 7.8%, to $79.65. Midtown South, where Class B rents rose

    14.4%, posted the biggest average increase of any submarket in Q2."

q   Carl Berg A `Godfather' Of Valley Real Estate (Mercury News, July 16th): "In 1998, Carl Berg formed Mission
          West Properties (MSW), of which he owns 74%. MSW took off, fueled by a hot real estate market [when] office

          space was tight. In 2002, just 2% of Berg's buildings were vacant. Today, MSW owns 107 buildings - mostly in

          north San Jose and Santa Clara. But the commercial real-estate business has cooled since the dot-com crash.

          Many of Berg's properties have aged and grown relatively undesirable. While about 18% of all Silicon Valley

          research-and-development buildings were vacant during Q1'07, for instance, about 30% of MSW's buildings

          were empty."

    q     Health Care REIT to Offer $350M in Notes (Forbes, July 16th): "Health Care REIT Inc., a REIT that invests in

          senior housing and health care real estate, said Monday that it is offering $350 million of convertible senior

          notes due 2027. The company is giving the underwriters a 30-day option to purchase up to an additional

          $52.5m notes to cover over-allotments. The notes may be converted into cash and Health Care REIT (HCN)

          stock. Health Care REIT plans to use the net proceeds to invest in additional properties and to repay


    q     REIT Fund Wins Battle, Loses War (The Street, July 16th): "The $127 million Neuberger Berman Real Estate

          Income Fund is slated to be liquidated – despite… successfully defending in court [against] a hostile takeover

          by a closed-end mutual fund… Open-end funds issue and redeem shares at net asset value [NAV]… [but]

          closed-end funds issue a fixed number of shares that trade... Their share prices can fall below their NAV/share

          when the investment strategy falls out of favor… NRL traded at a discount of just over 10% to NAV [on] March

          31. So… selling the fund's holdings… will allow shareholders to realize the full value of their holdings. [NRL]

          invests primarily in domestic REITs such as Ventas (VTR), Vornado Realty Trust (VNO)."

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