ILPT - Sell These 11 REITs While You Still Can
2024-06-10 09:00:00 ET
Summary
- The next two to five years probably will not be kind to REITs.
- Weak REITs with messy balance sheets, weak forecast for FFO growth, unsafe dividends, and/or overvaluation are likely to suffer the most damage in any downturn.
- This article identifies 11 companies that fit this description.
I have made no secret that I think REITs are going to sell off in a major way over the next couple of years. Even in the best of times, some REITs do better than others. But when the needle is pointing down for REITs in general, the weak ones get hammered.
What makes a REIT weak?
- Messy balance sheet, with high indebtedness, excessive variable rate debt, and/or weak EBITDA.
- Weak forecast for FFO growth, when coupled with a messy balance sheet.
- An unsafe dividend, or a profile of yield and dividend growth that is well below average.
- Overvaluation, in terms of Price/FFO and/or premium to fair price, or excessive shorting, especially when coupled with any of the above.
The List
What follows is a list of 11 REITs, across various sectors, that ping three or more of the above criteria. In all the tables that follow,...
Sell These 11 REITs While You Still Can