VNQ - Strawberry Fields REIT: An Impressive Story Of Growth But A Material Concentration Risk

2024-06-17 08:38:07 ET

Summary

• Strawberry Fields REIT is a young, internally managed senior living REIT with a growing portfolio, focusing on smaller, off-market acquisitions.
• The REIT is growing aggressively, buying properties and repurchasing shares.
• Over the past five years, adjusted funds from operations per share has grown by 12% annually.
• We explore STRW's business model and industry outlook.

Over the past five years, real estate ( VNQ ) has been broadly disrupted by a variety of macroeconomic factors. Between rising interest rates and the effects of the pandemic, each asset class faced a variety of unique emerging risk factors which have materially affected performance. Broadly speaking, real estate has struggled over the past five years because of these headwinds and many more.

However, what's more interesting is that performance across asset classes has diverged broadly during this time frame. Some asset classes, such as net lease, have been smothered by rising interest rates which have proven insurmountable. On the other side of the spectrum, tailwinds from the rise of artificial intelligence have been sufficient to overcome macroeconomic headwinds, propelling data center performance beyond most base case scenarios....

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