Good insider look at the way professional investors think about the interplay of asset classes through the prism of real estate and long term U.S. bonds. These people buying real estate, don't especially like real estate, they just hate the bond market. If the bond market blows up, they have incredible financing in place and can basically get a building "for free." One thing to point out is that you better not have to refinance that building after the bond market blows up though, or you're screwed.
AdventuresinCapitalism | Does Real Estate Equal A Bond Short?:
"Then it hit both of us at the same time. They aren’t looking for yield. They’re not looking for upside in rents or property prices or anything else. They’re looking to lock in 15 years of financing at 4%. They’re expecting a collapse in bonds. This will happen because the dollar will either be worthless in 15 years or the bond market will collapse—or probably a bit of both. They found a way to short huge size in long dated bonds and do it in an almost risk-free manner. Unlike borrowing to buy gold, there’s no mark-to-market and no margin calls or need to post more collateral. They expect the 15-year mortgages that they are taking out will be worthless soon and that they will have a free building."
