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3 REITs That Could Triple In The Recovery

Jun. 04, 2020 8:25 AM ETHST, HT, HT.PR.C, HT.PR.D, HT.PR.E, MAC, MHIVF, SPG, SPG.PR.J, IVQ:CA, IVQ.U:CA155 Comments


  • REITs nearly tripled coming out of the 2008-2009 crisis.
  • Today, many REITs are even cheaper than back then.
  • We present 3 REITs that have the potential to triple in the coming years.
  • Looking for a portfolio of ideas like this one? Members of High Yield Landlord get exclusive access to our model portfolio. Get started today »

Since the beginning of the recent bear market, we have been busy buying deeply discounted REITs at High Yield Landlord. As Warren Buffett would say:

"Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble."

We believe that there exists some generational buying opportunities in the REIT market right now and those who take the right actions will profit in the recovery.

We have already executed 12 phases of buying. Many of our recent additions have the potential to double or triple in value in the coming years as valuations normalize. I know that this sounds “too good to be true,” but the fact is that many of these REITs are now back at 2008-2009 levels, and we know how quickly REITs recovered back then.

It only took them 2 years to nearly triple:

Below we discuss three of our most opportunistic holdings that have the potential to triple in a recovery. Please note that these are also some of our riskiest holdings and we only own small positions as part of a well-diversified portfolio.

Macerich (MAC)

Mall REITs were beaten down already before the market crash - trading at large discounts to NAV and low cash flow multiples. Now after the crash, they are priced literally at cents on the dollar.


Malls are hit especially hard by the recent crisis, and it puts MAC in a risky position because it is heavily leveraged. However, there are some good reasons to remain optimistic, especially at the current price.

MAC owns the best of the best malls in the nation. These are not just shopping destinations. They are highly urban mixed-use properties in exceptional locations. Prior to the crash, they were generating record-high sales per square foot and so clearly, they can co-exist with Amazon (

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This article was written by

Jussi Askola profile picture

Jussi Askola is the President of Leonberg Capital, a value-oriented investment boutique that consults hedge funds, family offices, and private equity firms on REIT investing. He has authored award-winning academic papers on REIT investing, has passed all three CFA exams, and has built relationships with many top REIT executives.

He is the leader of the investing group Learn more >>.

Analyst’s Disclosure: I am/we are long MAC; SPG; HT; INQ.U. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (155)

Thanks for the article. Look forward to the comments.
Absolutely don't buy any of these. Especially HT. Just look at the charts since this was written. I'm sure eventually they'll be solid, maybe. Now isn't that time. Unless you just want to lose money. A lot of that going around now.
Jussi Askola profile picture
I am not sure if you are serious, but good luck trying to time the market! :)
We are landlords, not traders: seekingalpha.com/...
@Jussi Askola I'm 100% serious. I had been watching MAC before this article and used it as my excuse to jump in (not blaming you) and I'm currently down 12% after two fairly solid runs. I was in HT a week before this article currently down 22%. There's thinking you can time the market and then there's actual bad times to enter a stock. This is the second. Cases trending way up, states closing down again partially, I'm just saying watchlist but don't buy. Not sure why you'd disagree. If you were in these positions around the timing of this article you're definitely down. So by "good luck trying to time the market" are you really saying "just throw your money in whenever, it's cool?"
Jussi Askola profile picture
I think that you are not fit for stock investing.
I have been reading and using alpha for along time now, many years, to a lot of self learning and research. It is one of the easier websites to use.
I follow a lot of the comments on reading.
Brad Thomas is one of the better reading article writers that I u derstand better.
Jussi Askola profile picture
Thanks for sharing your thoughts!
Junk reits...Easy shorts
Good Article.
Curious as to what you think of Corepoint Lodgings(CPLG)? They were a spinoff from LaQuinta in 2018. Seems like many are over looking them. They are very cheap and I'd say that this is certainly a generational buying opportunity.
Is this a company that you follow?
All three of these stocks have been trending down for years. There are plenty of great reits on sale right now no reason to buy junk.
Jussi Askola profile picture
And they are up ~50% since publishing this article, much more than most other REITs.

These are contrarian, deeply discounted investment opportunities. This implies that they have been poor performers and are discounted as a result of it.

Past performance is not indicative of future results. Most individual investors fail to understand that the best time to invest is when there is blood on the street. Not when everything is sunshine and rainbows. More on our Top Picks: seekingalpha.com/...
I am curious into why DUO Fangdd went up so high? 1,000%. From 10.00 to the highest was 119.00 I beleive
I bought O, MAIN, CSWC, STAG, OKE a month ago. All strong companies beaten down temporarily. They also went up 50%+ theres no need to buy trending down companies you may get lucky here and there but its a losing strategy.
As a dividend investor who likes to buy and keeping adding to current income, why in the dickens would I get excited about the prospect of one of my holdings "tripling"?

I bought Union Pacific at $73. Look at it now. It's great for dividend incomr, and I have no intention of selling it. Sure would like to buy some more. But it's $185 now. Am I supposed to be happy about that?

Are you an investor who likes to buy shares for dividends and dividend growth or a capital gains investor? One is looking for secure income and the other is flipping houses.
Jussi Askola profile picture
That is a good point @notyouagain and I agree with you. If you have capital to allocate, then it is preferable to buy on the cheap.

We have conducted 15 phases of buying at High Yield Landlord since the beginning of this bear market. Even after the recent rally, prices remain attractive, and we continue to execute our accumulation strategy: seekingalpha.com/...
I get very excited when a stock I own triples...you can wait a lifetime for your dividends or make them quickly in capital gains, sell and reinvest.
And why did you forget the 6.5 billion debt MAC has..750 of cash on 1.5 bill of value. is not correct. 1.5 bill of market equity
Jussi Askola profile picture
This is a common mistake that investors make with REITs. The $1.5 market equity is very misleading because it is not based on the value of the assets. MAC is trading at a ~75% discount to NAV. Therefore, its true equity value is much greater and its leverage is much lower than it appears on the surface.
@Jussi Askola Common mistake made by non analysts. It is not 75% discount to Nav, not even close a common mistake of most using NAV. Which is why people thought Mac was a good buy at 33, when in fact it was an easy short. Your using backward looking rents, they will change and cap rates will rise and your Nav goes poof. Is Mac Ok here at 8 or 10 likely, but not based on your analysis and methods.
Jussi Askola profile picture
PS: SPG tried to acquire MAC for over $90 per share a few years back. Since then the normalized sales and NOI of its properties are up. We make fairly conservative estimates in comparison to SPG's estimate of fair value. I think SPG knows more about malls than you or me.
EverEquity profile picture
I subscribed to your HYL group a few days ago. I felt the sell off in REITs was exaggerated and your articles reenforced my views. Over the past month, I positioned my portfolio into 60% REITs (MAC, FRT, SRC, PK) 20% Airlines (LUV, DAL) and, 20% Oil (MPC). As you can imagine, I've done extremely well and haven't sold anything yet (although I probably will book some profits soon). Your recommendation on HT has me up 50% in just two days. Great call!

Subscriber for life!
Jussi Askola profile picture
@HNK-L2 I am glad to hear :) Now the key is to be patient and let the long term story play out: seekingalpha.com/...
Thank you for your support and if I can help with anything, I am here for you.
EverEquity profile picture
Im looking at add an apartment REIT. IRT in your opinion is still a good way to go?
Jussi Askola profile picture
@HNK-L2 Yes, it is. Even after the rally, it remains a strong pick: seekingalpha.com/...
Brad Kenagy profile picture
What cap rate did you use to arrive at your NAV for MAC?
Jussi Askola profile picture
We run test with 6-7.5% cap rates.
I think that long term as they diversify uses, their properties are worth closer to 5% cap.
Brad Kenagy profile picture
Thank you for the reply, was just wondering what cap rate you used since SPG bought TCO for 6.2% cap rate and MAC properties are not as good as TCO. I strongly disagree with any Cap Rate that is at or below TCO. It's a wide range, but I think if MAC sold all their properties as a group, fair cap rate would be 8%-9%.
jgrever621 profile picture
Long HT and MAC based on just the comments you make here. If they succeed, the rewards will be enough to pay for at least one that missed.

Both these two have properties of outstanding value. Somehow, this usually translated into excellent returns over time.
Jussi Askola profile picture
Thank you for your comment @jgrever621 I agree with you.
Interesting that all 3 are up ~60% in the 2 days of this post and the next day. And had a nice run up just before the post as well.

What a coincidence. Magic.
Jussi Askola profile picture
@cgtarga1 The market is quickly recognizing that these REITs are way too cheap. But even after the recent rally, there still exists some great opportunities that we are buying: seekingalpha.com/...
pjreddy profile picture
I like your article.
craftbrewinfo profile picture
How are Mall REITs "generational buying opportunities" That's just insane to say that.

Hotel REITs perhaps more long term, but I think REIT coverage on this forum is probably the most speculative second to Energy... .
Jussi Askola profile picture
Not just any mall REIT, but Class A mall REITs that are priced at 10 cents on the dollar. These properties were posting record high sales per square just last year. They are not going anywhere and yet, they are priced for bankruptcy.

Since posting this article, MAC is up ~40% in a few days...
We are buying more at High Yield Landlord: seekingalpha.com/...
A bit of click bait? A prediction of price tripling? i only regret that my crystal ball is not so clear. So, I've taken some common stocks off the table, and my portfolio went from 5% to 45% preferreds.
Jussi Askola profile picture
Well the three companies presented here are up by ~30-40% in just 2 days since posting the article...
Ash Gaux profile picture
Mall REIT's were a train wreck pre-COVID. Even the stalwarts like SPG had downward trajectories. Not seeing an entry here, even on speculation, until we've passed a second wave or immunization or other extremely effective treatment is in widespread use.
Jussi Askola profile picture
These are contrarian, deeply discounted investment opportunities. This implies that they have been poor performers and are discounted as a result of it.

Past performance is not indicative of future results. Most individual investors fail to understand that the best time to invest is when there is blood on the street. Not when everything is sunshine and rainbows. More on our Top Picks: seekingalpha.com/...
I don't have any input past a major "Thank you Jussi." One month into learning how to trade, and only a few days into SA Premium and your post made me $7000 in 12 hours. I'll be keeping an eye on your future posts.
Jussi Askola profile picture
Thank you for your support @GangestKhan
Feel free to join us for a 2-week free trial at High Yield Landlord and join our community of 1,800 investors: seekingalpha.com/...
Malls are at the beginning stages of being mauled.

Too many young investors were not investing in the 1970s and 1980s when malls were in a constantly changing environment and chewing up cash flows spending big on capex to attract new tenants. Tenants are born and others die but we are on the net on net dying side of retail tenants with no one knowing what the new formula for malls will become.

Example is thinking that people would go to small gyms in malls. Well that is pretty much done. I never understood why anyone would want to go to a small gym with limited equipment and take the time to go in and out of a mall to do their gym thing.

It was a great employment report but we have a wave of job losses coming in high paying jobs and replacement jobs as cleaners or track and tracers are low low paying jobs..... we have a long slog ahead and the markets will recognize it and adjust accordingly.

I would encourage everyone to focus on bank earnings which will begin to report in early July because that will be more informative on many fronts... credit defaults of all types and write downs.... that will be speaking to the true underlying weakness in the economy.
Jussi Askola profile picture
Please note that we are talking about investing in the highest quality malls of the nations. These are not the malls that are dying. They actually benefit from dying malls because it consolidate the market.

MAC reported all time high sales per square in 2019. Detailed research here: seekingalpha.com/...
craftbrewinfo profile picture
@Brucejfern very nice post. I agree. We have Q1 earnings posted ( which had maybe 2 weeks or so of covid-19, and we saw bad things. Now as we wind down with Q2 this month and all the job losses, mortgage defaults, failed business and people not out circulating, lets see what transpires.

Then we move to the 3rd. Quarter which will have ( assuming the economy fully opens) several weeks of covid19 impact on the front end. let's see what transpires. The market is partying like it's 1999, but something is totally amiss here
My pick is WHLR (do the research and read all the filings
Jussi Askola profile picture
It is very cheap and there is appeal to it. However, we favor one of its close peers at High Yield Landlord: seekingalpha.com/...
You should phrase it that there are 3 REITs that can 3X with a 10% probability, or they will go bankrupt with a 90% probability.
Jussi Askola profile picture
You got the probabilities wrong. It is the opposite.
PS: These names are up ~30% on average since posting this article.
Then Goldman Sachs has it wrong. Their Covid Strategy includes shorting REITS; especially commercial real estate.
Jussi Askola profile picture
Ouch! That must hurt them quite a bit.
gimmeecoffee profile picture
Wow, a great jobs report today, with one of the areas of biggest gains in the hospitality industry, add to that the rise in hotel occupancy for the 7th straight week, and we got a nice future for good hotel stocks. We suffering HT holders may see a nice 7+ today in the common.
Jussi Askola profile picture
Pent up demand is real and people are quickly returning to work. Thank you for sharing @gimmeecoffee
gimmeecoffee profile picture
lol, sorry, I meant to say 8+ on the common!
Jussi Askola profile picture
@gimmeecoffee We will post updates on our latest positions to maximize gains. Feel free to join us for a free trial: seekingalpha.com/...
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