Extended Stay Hotels, saddled with a huge debt burden from its $8 billion top-of-the-market buyout, filed for Chapter 11 protection Monday, in one of the largest bankruptcy filings by a commercial real-estate company.
I have been warning about the problems in the commercial real-estate area for the past six months. These toxic loans will have a very negative impact on "regional banks." Extended Stay Hotels is just the "tip-of-the-iceberg."
If you want to short the commercial real-estate sector, take a look at SRS, which is a double-short ETF on this sector. It is currently trading at $19.83, which is up 9% so far today. Upside potential is at its 200-day EMA at $28. If you take the trade, set your stop at two ticks below today's low of $18.63, or $18.61.
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