We have taken a second look at the concerns raised by Ackman now that we have a copy of his short thesis on Realty Income (O) in PowerPoint and have come up with the following observations. For those who do not subscribe to my blog, I have decided to make a significant portion of my real estate analysis available to the public, so as to fully communicate the apparently unforeseen cash flow and valuation situations of some of these REITs. This is in anticipation of a slew of fresh REIT short candidates to be delivered to subscribers in the upcoming weeks. I feel the sector is ripe for a revisiting in terms of valuation, cash flow issues and macro outlook. For part one of my review of Ackman's "Realty Income (O)" opinion, click here (requires a quick, "free" registration).

To begin with, I have taken an earlier look at Realty Income, and while I agree that they may not be in the best shape and do not have strong macro prospects, I didn't see an absolute case for a short. I was then forwarded the full presentation given by Ackman, in which I was able to review more of his reasons for the short thesis. The following are my findings, followed by a detailed analysis of another REIT that, although may not be facing as stringent a macro dilemma, has a much more pressing cash issue at hand. Before we get to that, let's go over my second (albeit still relatively and admittedly cursory) review of the Ackman "O" short thesis. Keep in mind that Ackman and his crew probably took more time to review "O" and interact with its management than I did.