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REITs and the Survival of Fannie Mae and Freddie Mac
The Simplified Investor (September 9th, 2008) Writes:
The government takeover of Fannie Mae and Freddie Mac will have far-reaching economic effects. For example, hedge funds that bet against the two companies have already seen windfall profits as the stock prices of both companies plummeted over the weekend, while the financial institutions that invested in the nearly $5 trillion in mortgages and mortgage-backed securities that FNM and FRE guarantee can breathe a sigh of relief. The government bailout should help avoid a global financial crisis - but it might not help all of the Real Estate Investment Trusts (REITs) that depend on loans from Fannie and Freddie to finance their growth.
REITs are corporations that pool investor capital to purchase either income property or mortgage loans. An example of the former is Simon Property Group (NYSE:SPG), which owns strip malls and shopping centers throughout the United States. The latter group includes companies like Annaly Capital
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