IYR - IYR: Cost Of Capital Only Comes Down In Adverse Economic Scenario
2024-06-27 06:22:33 ET
Summary
- To begin with, we are not major fans of ETFs of REITs, since REITs themselves are already asset portfolios and more layering is unnecessary and costly at 0.4% expense ratio.
- IYR is underperforming because of high costs of capital, and we think high or even higher costs of capital are the status quo for the foreseeable future.
- An adverse economic scenario could bring down costs of capital, which would be a net positive only for some of the REITs in IYR, with others being exposed on demand-side.
- We'd rather be selective here, although we aren't buyers of real estate right now at all.
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IYR: Cost Of Capital Only Comes Down In Adverse Economic Scenario