CA - The 2008 REIT Disaster Is Not Likely To Happen Again
2024-03-16 09:00:00 ET
Summary
- REITs are unloved today by the market.
- Some investors fear that REITs could face another big crash.
- I explain why I believe that this is very unlikely.
Today, the market sentiment of the real estate investment trust, or REIT, sector ( VNQ ) is very negative. REIT share prices have dropped by ~25% on average over the past two years, even as their cash flows grew by 5-10% during this same period:
As a result, REIT sector valuations are today near the lowest they have been in a decade. It is not unusual to find REITs that trade at 30%+ discounts to their net asset values, single-digit multiples of their cash flows, and near-10% dividend yields. EPR Properties ( EPR ) and NewLake Capital Partners ( NLCP ) come to my mind....
The 2008 REIT Disaster Is Not Likely To Happen Again