Don't Be Afraid to Invest In Commercial Real Estate - The Bullish Case for Equity REITs
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 24 May 2023
⏱️ 26 minutes
🧾️ Download transcript
Summary
Why equity real estate investment trusts should be part of your investment portfolio despite the office sector's struggles.
Topics covered include:
- Why some office REITs are down 30% in 2023, and owners are walking away from buildings
- How commercial mortgages differ from residential mortgages
- The broad sector diversification found within equity REIT ETFs
- What have equity REITs performed long-term and what drove those returns
- What is a reasonable return expectation for equity REITs
- Why equity REIT prices adjust more quickly than private real estate values
- Why you should be wary of private REITs
For more information on this episode click here.
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Show Notes
Slow Return to Work Pummels Office Stocks by Peter Grant—The Wall Street Journal
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A Complete Guide to Equity REIT Investing
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Transcript
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| 0:00.0 | Welcome to Money for the Rest of Us. |
| 0:02.8 | This is a personal financial on money, how it works, how to invest it and how to live |
| 0:08.0 | without worrying about it. |
| 0:09.0 | I'm your host David Stein, today is episode 434. |
| 0:13.5 | It's titled Don't Be Afraid to Invest in Commercial Real Estate. |
| 0:19.7 | One of the things we've been focusing on at Money for the Rest of Us over the past few |
| 0:24.8 | years is how can we make investing simpler? |
| 0:28.7 | How can we understand the underlying principles, the drivers of performance, the basics of |
| 0:36.7 | the economy and how these different elements connect together? |
| 0:41.2 | So that we don't get caught up in the latest bad news, causing fear and causing us to |
| 0:48.2 | want to run away or exit or sell a specific investment. |
| 0:52.8 | For example, here is a recent Wall Street Journal headline. |
| 0:57.1 | It's low return to work, Pummel's office stocks, an article by Peter Grant. |
| 1:02.5 | He writes, share prices for some of the largest office landlords have dropped to near |
| 1:07.5 | historic lows, reflecting a sluggish return to office rate and a rise in a number of |
| 1:13.4 | investors betting that these stocks will keep falling. |
| 1:17.4 | It gives some examples of two publicly traded equity real estate investment trust. |
| 1:23.4 | One is SL Green, who's talking about $22.50 per share, down from $140 back in 2015. |
| 1:32.5 | Fernando Real Estate Trust is another REIT. |
| 1:36.2 | It owns office buildings in San Francisco, Chicago, and New York. |
| 1:40.5 | It's priced at $13.13 per share, down from $67 per share in 2020. |
| 1:48.7 | Both of those two public equity REITs are down 30 percent year to date. |
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