The Anna Maria Island Sun Newspaper

Vol. 8 No. 47 - August 13, 2008

BUSINESS


Thompson Preschool set to open

Anna Maria Island Sun News Story

Kyleigh Rydzinski, 21 months old, enjoys drawing in the
art room as her parents look over Thompson Preschool
and Kids Club. SUN PHOTO/TOM VAUGHT

Thirty families signed up to send their kids to Thompson Preschool and Kids Club, 2015 75th St. W., Bradenton, during an open house last Saturday and Sunday, according to owner Cindy Thompson.

The facility will open Monday, Aug. 18, offering day care for children from infants to five years old and after-school care for kids up to 10 years old with pickup at local schools.

Thompson, who previously had The Playroom, a children’s drop-in and activity club in Holmes Beach, said the new one would be open from 7 a.m. to 6 p.m. Monday through Friday and Saturday evenings until 10 p.m. for a parent’s night out. She said it would be closed Sundays and 12 holidays a year, making it a year-round facility.

"Our focus is to be a resource for families providing flexible individualized care," she said.

Starting Thompson Preschool and Kids Club has taken much of her time, and Thompson, who was the incoming chairman of the Anna Maria Island Chamber of Commerce Board of Directors, will delay taking that position. Current Chairman Mark Davis has agreed to extend his term a year.

Thompson will continue as chairman of the Bayfest Committee. She said that this year’s event, scheduled for the weekend of Oct. 18-19, will be exciting, despite the closure of the Anna Maria Island Bridge for rehabilitation. She said that there won;t be a Friday evening festival, but the celebration will be extended on Saturday for three hours. It will run from 10 a.m. to 10 p.m.

There will be an organizational meeting for Bayfest on Wednesday, Aug. 13, at 5 p.m. in the AMI Chamber of Commerce. Anyone interested in helping is welcome to come. Call Cindy at 761-4766 for information.

Anna Maria Island Sun News Story
Investment Corner

Residential real estate not ready to rebound

Back at the end of 2005 and early 2006 ,I sounded the alarm over the speculative behavior being exhibited in residential real estate, warning that it would not go on much longer. I was right, as it turned out, but I did not foresee the peripheral issues related to real estate speculation that are now causing much bigger problems.

It would take three or four of my biweekly columns to cover the full story. To briefly summarize:

Speculative behavior + easy money loaned from banks = residential real estate bubble. Add in loans packaged, securitized and sold to large institutional investors by major brokerage firms + use of leverage to buy more loan packages than they could really afford = contagion when it all falls apart.

Real estate bubble + pin prick from forced sales and foreclosures by those who couldn’t flip properties in a few months for a huge profit = a long slide down the worst real estate price declines since the Great Depression. Contagion effects include selling pressure in the stock market and banks now afraid to lend due to worries about how bad the economic slowdown might be, resulting in low consumer confidence.

So now the bubble has move over to commodities, which I believe will also receive the inevitable bursting pretty soon, but that leads me back to the title of this article. I don’t believe the price declines are over for real estate, but we are closer to the end of the process than the beginning and that is good news. Good news that is for investors who buy the securitized form of real estate through ownership of real estate investment trusts, known as REITs. Most of these investment vehicles have undergone price declines of about 30 percent or more from peaks set at the beginning of 2007, but are recently starting to recover.

REITs are effectively a real estate holding company which owns physical properties. Most specialize in a particular type of real estate, ranging from office buildings and industrial parks, to apartment complexes and shopping malls. Also available are REITs which own hospitals or assisted living facilities.

The neat thing about REITs is that the average investor can get a lot of diversification of property type and geographic location very quickly. While single family homes are likely to languish in price for perhaps several more years, the demographics for apartment REITs are looking very good, and we are optimistic about many forms of commercial property as well

Many of you reading this (like me) are members of the baby boom generation (born between 1946 and 1964). Our generation is about 85 million strong and has changed consumption patterns as we moved through the various economic phases of our life. Well, spending money isn’t the only thing we’re good at because we created the echo boom generation, now over 100 million strong. The bulk of the echo-boomers are in their 20s, finishing college and getting ready to move out on their own, which usually means renting an apartment for a few years.

I don’t recommend that you run out and put your entire nest egg into REITs, which own apartments, but they would be a good piece of a diversified real estate portfolio. What about the current economic slowdown? I believe that outside of the aforementioned greedy financial firms, corporate America is pretty healthy, flush with cash and not likely to begin abandoning its office buildings.

Sure, there will be some more pain before this is over, but remember that as a tradable, equity type security; REITs tend to discount the news of the day well in advance. I think REITs are not a bad place to start establishing positions again over the remainder of 2008. I suggest a mutual fund or an exchange-traded fund, which can give you ownership across a broad spectrum of properties in just one purchase. Current dividend yields are over 4 percent and there is the potential for long-term appreciation in addition to the income.

The best part? Few are talking about buying these vehicles. When everyone wanted to own them (back in 2006), it was, of course a mistake. Now that they are ignored, they are a much better buy for the patient investor.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing.


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