JRS - JRS: Inflation Not Beaten But This Discounted Real Estate Fund Can Help

2024-01-24 13:59:27 ET

Summary

• Nuveen Real Estate Income Fund offers a high level of income with a current yield of 8.99%, beating the yield of the iShares U.S. Real Estate ETF.
• The fund has outperformed benchmark indices, with shares up 11.83% compared to the S&P 500's 11.05% gain and the iShares U.S. Real Estate ETF's 10.36% gain.
• Despite recent challenges in the real estate sector, the JRS fund may be a worthy addition to income-focused investors' portfolios due to its potential for capital appreciation.
• The fund is fully covering its distribution and is trading at an enormous discount on net asset value.
• Inflation is likely to continue to be a problem going forward due to the financial position of the Federal Government, so the fund's use as a store of value is valuable.

The Nuveen Real Estate Income Fund ( JRS ) is a closed-end fund, or CEF, that income-focused investors can use to obtain a much higher level of income than most real estate investment trusts, or REITs, are able to deliver and still retain the inherent protection against inflation that real estate is able to provide. This is immediately apparent in the fund’s 8.99% current yield, which is far above the 2.85% yield of the iShares U.S. Real Estate ETF ( IYR ).

This is a fairly typical characteristic of funds like this, as many closed-end funds are able to beat similar indices in terms of yield. Unfortunately, the real estate sector in general has not been an especially good performer over the past few years as higher interest rates have slowed down activity in the sector and the remote working trend has caused commercial office vacancies to soar. However, there are some reasons to believe that the worst is probably behind us and is already priced into the fund. Inflation is far from beaten, despite some of the market’s recent optimism, and the ability of real estate to hold its value in real terms could make it a worthy addition to the portfolio of any income-focused investor right now....

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