Thesis
The negative shock that Covid had on stock prices in March of 2020 created a significant buying opportunity. The Vanguard Real Estate Index (VNQ) dropped from over $100 per share to the low $60 range in a matter of
Cigar-Butt Investing: Covid Discounts Among 4 REITs Offering 20-50% Upside
Summary
- The stock market and real estate companies are trading much higher than February 2020 levels. However, a few select deep values have yet to return to pre-Covid pricing levels.
- American Finance Trust and Whitestone both own various types of retail properties. They have outperformed their peers in terms of net operating income and rent collection levels.
- Both AFIN and WSR trade at massive valuation discounts compared to peer net lease and shopping center companies, measured by earnings multiples and net asset value.
- Franklin Street Properties and Columbia Property Trust are office REITs that have maintained steady and high rental collection rates, yet their stock prices are down significantly due to Covid.
- FSP trades at a steep discount to its peers, similar to AFIN and WSR. CXP, in contrast, presents a strong value proposition mostly due to its recent buyout offer.
Alex Mansour is an undergraduate college student. Writing for Seeking Alpha since 2019, I cover primarily the equity real estate investment trust (REITs) space. I invest across all sectors of real estate, focusing on companies with strong earnings growth and trading at discounts to fair value. Relative to other analysts, my coverage emphasizes smaller and underfollowed companies that receive less attention from the mainstream, resulting in discounted valuations. While a long-term investor, I will recycle capital from companies that have reached or exceeded their fair value into more undervalued companies.
He is a promoting author to the investing group iREIT®+HOYA Capital . Hoya specializes in the portfolio management of publicly traded real estate securities and dividend ETFs. Learn More
Analyst’s Disclosure:I/we have a beneficial long position in the shares of AFIN, WSR, FSP either through stock ownership, options, or other derivatives. 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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