We were literally in survival mode, locked inside, tenants not paying rent in some cases, and GDP declined 33% at one point, the worst contraction in history. Only REITs were cheap in recent years, at the start of the pandemic, but uncertainty was still high. Now is arguably the best time in years to buy a REIT. RHP is not rated (Jonathan Litt via Twitter)ĪMH is not rated (Jonathan Litt via Twitter) Read | Stock Market Sectors: Stock Market Updates: Power Stocks with the market rallyĪVB is not rated (Jonathan Litt via Twitter) Here are some of his tweets about BX, ACC, AVB, RHP and AMH: Jonathan Litt, founder of Land & Buildings (one of the largest activist REIT hedge funds in the world), has been tweeting about the many opportunities in the REIT sector over the past weeks. I like to use BSR as an example because it owns some of the most sought-after properties in commercial real estate, and even then, it’s still heavily discounted, so you can imagine that other What does this mean for REITs? Here is a photo of Satori Frisco Apartments, a community owned by BSR located in Frisco, Texas:
SATORI APARTMENTS PROFESSIONAL
Essentially, this means that you get to buy high-quality real estate at ~70 cents on the dollar, and you get professional management, diversification and liquidity on top of that for free. Despite this, it is priced at around 30% discount to NAV, which is pretty great. It owns affordable apartment communities in fast-growing Texan markets and is currently increasing its rent by ~20% as the lease expires. If you use the consensus NAV estimates of regular analysts, the average NAV discount will approach 15% and it is not uncommon to find high-quality REITs trading at more than 20% discount as well.īSR Real Estate Investment Trust (OTCPK:BSRTF/HOM.U) is a good example. It is based on calculations from Green Street Advisors, which is notorious for being conservative and forward-looking with its NAV estimates. Typically, REITs trade at a small premium to the net asset value, or NAV for short, but today, they are priced at an average 10% discount. REITs Are the Cheapest in Years (Green Street Advisors) Blue-chips like Public Storage (PSA), American Tower (AMT), and Prologis (PLD) are down ~30%, which really tells you how pessimistic investors have become.Īccording to Green Street Advisors, REITs are currently the cheapest they have been since the start of the pandemic, if you ignore the initial crash that happened in March 2020: Interestingly, many of the highest quality REITs are actually at the bottom. The broader REIT market is down ~20% YTD, and as you can see from the table below, there are plenty of individual names that are down 30% from their recent highs: The market continued to decline in June and opportunities are now abundant.
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