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Get Ready For New All-Time Highs In The REIT Market



  • The REIT market has officially recovered from the pandemic.
  • Despite that, we think that REITs still have a long way to go and remain undervalued.
  • We demonstrate this by comparing REITs to other major asset classes.
  • Looking for a portfolio of ideas like this one? Members of High Yield Landlord get exclusive access to our model portfolio. Learn More »
Young finance expert analyzing financial charts on smart phone
Photo by guvendemir/iStock via Getty Images

The REIT (VNQ) market has now fully recovered from the COVID crash and increasingly many investors are asking themselves:

Is it time to sell?

My answer is a clear no.

I still have about 50% of my net

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This article was written by

Jussi Askola, CFA 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 High Yield Landlord, where he shares his real-money REIT portfolio and transactions in real-time. Features of the group include: three portfolios (core, retirement, international), buy/sell alerts, and a chat room with direct access to Jussi and his team of analysts to ask questions. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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 (36)

30x multiples and 2% dividends? Nirvana, but how could that be remotely possible with cyclical securities such as mREITs?
Jussi Askola, CFA profile picture
@MegaDivGuy I am not talking about mREITs, but about traditional eREITs, which represent >90% of the REIT market.
Jussi Askola, CFA profile picture

Thanks for reading!

We just published our monthly portfolio review for members of High Yield Landlord. You can read a portion of it for free here: seekingalpha.com/...

Have a great day!

Thomas Mazzarino profile picture
Thank you for your article, Jussi. I currently own MPW and OHI - if you could only buy one other REIT right now, which would it be?
LemonButt profile picture
@Caprazzi CTT, UNIT, BNL, EQR. I'm also long MPW.
Jussi Askola, CFA profile picture
@Caprazzi I wouldn't own only 3 REITs, and especially not with 2 being healthcare REITs. It is important to be better diversified. Feel free to join us for a 2-week free trial to access all our Top Picks: seekingalpha.com/...

Have a great day!
Great article! What top five REITS would you recommend?
Jussi Askola, CFA profile picture
@leegsquare Thank you for your interest. Please note that we only discuss general topics on the public site of Seeking Alpha. Our Top Picks are exclusive to the 2,000+ paying members of High Yield Landlord. It wouldn't be fair to them if I posted them here. Note however that we offer a 2-week free trial: seekingalpha.com/...

Have a great day!
Great article - must say I agree 100% with your analysis of the asset classes. The masses want to make the quick buck with hot momentum stocks, and REITs can be like watching paint dry. Unless you have $100M, bonds are just dead money as far as the eye can see. I’ll be patient and play the long game to success with real estate equity REITs. WPC, O, AVB, MPW, HTA - and many others are great long term buy and hold investments. Boardwalk REIT (BOWFF) is another great value find I’ve added to my portfolio - after you highlighted awhile ago. If you are patient and can wait a few years BOWFF is a keeper.

While not the bargains they were a few months ago, there are some REIT preferred stocks that provide higher income in exchange for less growth at comparable good risk return characteristics. RLJ, AFIN, MNR, UMH, UBP all have good preferreds. I am mostly sticking to common as I have a longer term horizon with less need for current income.

Equity investment entails risk, but not all equities have the same risk. REITs are my favored equity class now and looking forward in the future.
Jussi Askola, CFA profile picture
@7822751 Thank you for sharing your thoughts!
lionbark profile picture
Could you publish P/FFO and dividend yield numbers for other ex-US developed nations? I’m interested to see if Germany is an exception or if the US market is truly mispriced vs the other 0% interest rate nations
Jussi Askola, CFA profile picture
@Angus Barkow I am currently working on an update covering international REITs for High Yield Landlord: seekingalpha.com/...
Buy...buy....buy....as Cramer says
High Yield FIREVestor profile picture
ATH for REITs coming? Gonna sell some DOGE after the Dogefather's SNL skit tonight and buy REITs! DOGE currently ATH at $0.73. For those of you who like to preach to us, it's all speculation, no value: WE KNOW. SPARE US YOUR LECTURE. WE KNOW WHAT WE'RE GETTING INTO, AT LEAST I DO. STOP LECTURING US ABOUT THE VOLATILITY OF CRYPTO.

DOGE best speculation I've ever made, +1500%. Why would you buy stocks when you can transform a $1000 into 1000"s in just weeks or months? 🤦😂
Jussi Askola, CFA profile picture
@Investing4FIRE I wish you good luck with DOGE and congrats on your gain!
High Yield FIREVestor profile picture
@Jussi Askola thank you brother. The saga ends tonight, sell at or above $1 or at 0.60, still loads of profits at any sell point...
Jussi Askola, CFA profile picture
@Investing4FIRE I will be watching. I don't like to gamble, but I would prefer to buy some DOGE than a lottery ticket :)
I would like to answer your question "But what happens when you have an increasingly large amount of demand for stocks, which are limited in supply"? You get SPACs and IPOs.

Very logical comparison. You could have gotten into more "alternatives" besides REITs. However, as you demonstrate, comparatively speaking REITs are better than the other investments that you listed plus the underlying asset is an inflation hedge if the "free money" world has you worried about inflation.
@PreCambrian re: inflation. Although the underlying asset is an inflation hedge many REITS will not do well when confronted with the inflation because their cost of capital will rise. As a result they cannot grow as fast. No? They will do better than high growth stock, yes. But are REITS the place to be when inflation and interest rates are rising?
@PickANewName REITs tend to do well in a rising rate environment. I would expect an initial drop due to some yield investors going to other investments with higher returns but eventually the income starts to increase. See www.reit.com/... and www.investopedia.com/...
Jussi Askola, CFA profile picture
@PreCambrian Thank you for sharing your thoughts.
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