Urgent Warning To REIT Investors



  • Volatility is back in a big way.
  • Before you panic and sell, we suggest that you read this article.
  • Our accumulation strategy remains intact. We continue to buy more shares of discounted REITs, week after week.
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After a strong recovery from late March until Mid-September, REITs sold off by nearly 10% over the past few days:

That's the average performance of a market-cap weighted REIT ETF (VNQ), so you can imagine that many individual REITs did even worse.

For instance, the already beaten-down mall, office, and hotel REITs dropped by 15-20% in just a few days:

  • Simon Property Group (SPG): down 15%
  • SL Green (SLG): down 15%
  • Host Hotels (HST): down 15%
  • Kite Realty (KRG): down 16%
  • RLJ Lodging (RLJ): down 21%

Even the highest quality blue-chips are suffering significant volatility. Most notably, Federal Realty Trust (FRT) dropped by nearly 10% in a single day on Monday.

This is an A-rated REIT with a 52-year track record of rising dividends and resilient fundamentals for those of you who don't know FRT. It has historically served as a "Safe-Haven" during times of volatility. So it sure isn't reassuring to see it drop like a rock. Many of you may ask yourself what's happening.

We wish we had the right answer for you, but the reality is that there isn't much news. We are still going through a pandemic. Covid cases are still on the rise. And the vaccine still isn't ready for mass distribution. Nothing that we wouldn't know already. REITs can go up and down by large amounts without any underlying reasons in the short run. The next question is, how should we approach this recent sell-off?

It may be very tempting to sell now to avoid any further pain. This is particularly true when everyone else appears to be panicking. How often have you seen the following comments on Seeking Alpha?

REITs cannot collect rents. Sell!

REITs are going much lower. Sell!

REITs will go bankrupt. Sell!

And that's what we want to

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This article was written by

Jussi Askola profile picture
Become a “Passive Landlord” with our 8% Yielding Real Estate Portfolio.

Jussi Askola is a former private equity real estate investor with experience working for a +$250 million investment firm in Dallas, Texas; and performing property acquisition in Germany. Today, he is the author of "High Yield Landlord” - the #1 ranked real estate service on Seeking Alpha. Join us for a 2-week free trial and get access to all my highest conviction investment ideas. Click here to learn more! 

Jussi is also the President of Leonberg Capital - a value-oriented investment boutique specializing in mispriced real estate securities often trading at high discounts to NAV and excessive yields. In addition to having passed all CFA exams, Jussi holds a BSc in Real Estate Finance from University Nürtingen-Geislingen (Germany) and a BSc in Property Management from University of South Wales (UK). He has authored award-winning academic papers on REIT investing, been featured on numerous financial media outlets, has over 50,000 followers on SeekingAlpha, and built relationships with many top REIT executives.

DISCLAIMER: Jussi Askola is not a Registered Investment Advisor or Financial Planner. The information in his articles and his comments on SeekingAlpha.com or elsewhere is provided for information purposes only. Do your own research or seek the advice of a qualified professional. You are responsible for your own investment decisions. High Yield Landlord is managed by Leonberg Capital.

Disclosure: I am/we are long SPG; UBA; ESRT;. 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.

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