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This Is Your Once-In-A-Decade Chance To Win Big



  • Today, you have a “once in a decade” chance to win big with REITs.
  • REITs have dropped heavily despite enjoying strong fundamentals.
  • Let others panic. REITs always recovered and richly reward those who bought them following market crashes.
  • I do much more than just articles at High Yield Landlord: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »

Possbile Opportunities Ahead.


The stock market is down heavily over the past few weeks.

The S&P500 (SPY) has officially dipped into a bear market, down 25% year-to-date, and I am down even more than that since I am mainly invested in REITs, which are down

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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 a beneficial long position in the shares of UMH; UNIT 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.

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 (95)

A great article like always!!
which REITs are priced the same as in the 2020s?
Jussi Askola, CFA profile picture
@Itay.lironne Lots of them are trading even below 2020. Vonovia is a good example of a REIT-like entity that's even lower. Feel free to join us for a 2-week free trial to access all our latest Top Picks: seekingalpha.com/...
One market influencer that needs to be factored in this time is government policy. Deficit spending in peacetime has never been this high for so long a projected period. If not addressed, inflation will eat up most of the benefits of rising stock prices. Despite calling much of this spending "investment", it is, in fact, providing more fuel for the inflation fire through nonproductive expenditures as loan forgiveness and subsidized indolence that will result in a very slow recovery, if at all.
Jussi Askola, CFA profile picture
@linkdonald This is not exactly peace time.
@linkdonald Folks working from home are costing Companies Rents to go down.
Good Luck to All.
Jussi Askola, CFA profile picture
@HereToWin Only ~5% of REITs invest in offices
look, i love these articles but can you please stop with the headlines. “once in a decade”, the last once in a decade was march 2020, a whopping 2.5 years ago.

i like the price versus underlying value here, leave it at that
Jussi Askola, CFA profile picture
@Gmacfree The point here is that some REITs are today priced at much lower valuations than even in march 2020. You appear to have missed that part. I think that the risk-to-reward of buying today is often better than it was in march 2020.
@Jussi Askola We are 20-35% higher today on VNQ, SCHH, XLRE than in March of 2020.
Jussi Askola, CFA profile picture
@rip1955 Yes, but property values and rents are up significantly since then, risks are much lower than in March 2020, and some specific individual REITs are priced even lower than in March 2020
The primary factor in driving up asset prices for 40 years was a bull market in bonds resulting in lower interest rates.
Now that factor no longer exists . We are
have entered a period of negative returns in bonds , stocks and especially real estate for the next decade .
The US followed Japan’s lead in running huge deficits and will soon pass Italy to be the 2nd most indebted industrialized country . The US federal governments pension and health care obligations are huge . Similar obligations of state and local governments are also huge . Either states and localities will default on these obligations or else Washington will backstop them with devastating budgetary and inflationary results .

The reason why Britain s pension funds got into trouble was that assets had been driven up to a point where future returns were so low that pension had to assume leverage to have any hope of paying its obligations . The action by Britain is at best a temporary relief of market panic . More action by the big brother government will only exacerbate their problem . The only solutions for Britain are to increase productivity , to reduce the parasitic forces of the City of London , to reduce the GiNI coefficient and to face the reality that it it is not pre WW1 and it can no longer afford to be a military power
The only way out for the USA is the similar to Britain except substitute Wall St for the CITY of London and post WW2 for pre WW1.
Jussi Askola, CFA profile picture
@r cohn No, that is not correct. Your point has been debunked in numerous research studies. Lower interest rates have been one factor among many others. The primary factors for real estate appreciation have been growing cash flow and rising replacement values. Cap rates have not just compressed because of lower interest rates. They have largely compressed due to the greater desire of investors to diversify and include alternatives in their portfolios. This is not changing even despite somewhat higher interest rates, which remain deeply negative after taxes and inflation (not sustainable for investors)
I agree completely that we are in for a generational opportunity for wealth making. But I feel strongly that it is not here yet. So far we are only seeing the reactions to fed policy, not that actual effects of it. Good deals are here, but great deals are coming.
@Mark335 well said
Good luck
Jussi Askola, CFA profile picture
@Mark335 " But I feel strongly that it is not here yet. "

That's the exact type of prediction that's impossible to make.

The market is a forward looking machine.
In a falling market with more Fed pain to come, I think that is a very easy prediction to make! What’s the difference between that and “Now is the opportunity of a generation”
All opinions with rationalizations!
For retirees are there defensive REITS that have lower volatility that have gone done less then most others?
Jussi Askola, CFA profile picture
@reality-hurts Yes, there are some. Although, I don't think that you should seek to buy those REITs that have suffered lower volatility. What matters is that you get a safe and growing dividend if you are a retiree. You are likely to find better opportunities in REITs that have experienced greater, not lower volatility. Feel free to join us for a 2-week free trial to access all our Top Picks: seekingalpha.com/...

Have a great day!

PghFundManagement profile picture
Your piece is indeed Very true. Covid19 drawdown led to many Preferreds in REITs and hotels atleast to go extremely oversold.
Jussi Askola, CFA profile picture
@PghFundManagement Thanks for sharing your thoughts
I don't think this time is different, so REIT's will drop more when the FED raises rates again.

Even though it's illogical, history shows REIT prices keep dropping until the FED signals it's going to stop raising rates. And right now the FED seems determined to keep raising rates.
Jussi Askola, CFA profile picture
@Robert in Vancouver No that is not correct. REITs have historically generated high total returns during times of rising rates. This is a common misconception
CALgoldenBears profile picture
Interesting you cited these 2: “Some good examples include UMH Properties (UMH) and Uniti Group (UNIT)”

UMH’s current dividend is under 5%. Is it worth the extra risk vs treasures?

UNIT: I have following that as well but my alert price is $5.50-5.75 which is about what it traded when Covid was official back in March 2020.
Jussi Askola, CFA profile picture
@CALgoldenBears The dividend yield says nothing about the valuation. UMH is priced at a steep discount to NAV. Besides, UMH is a growth REIT.
With regard to timing the market - The FED has shared their plan on rate hikes. A lot of analysts are anticipating an earlier pivot. This anticipation is creating these market bounces.
Don’t fight the Fed trumps can’t time the markets!!!
Jussi Askola, CFA profile picture
@jm-3 Just because rates are rising does not mean that prices will drop. REITs have historically actually outperformed and generated high returns during times of rising rates.
@jm-3 when you say “pivot”, do you mean a cessation of rate hikes or a reversal of rate hikes? I could understand a cessation, even if only for political purposes for next month, but when I think pivot, I think reversal, which I think is a long time off. At a minimum, cessation and a six month monitoring period would be prudent if the Fed pivots. I believe the next action, if different from the previous three months, will be a reduction in the rate rise to 50 BP, or maybe 25 bp.
@Joe jetski my point was that the market is moving based on expectations of fed actions. The fed has been pretty clear. When the market anticipates the fed going slower or shorter than the plan, the market moves up. When the fed clarifies or acts acts according to plan, the market snaps back.
Market will come back when the Fed finishes their task but a lot of money is going to change hands with all the false starts anticipating the fed acting different than the plan.
falconetti aanthony profile picture
my plan is to nibble at market on down days...this volatility is not near over...but there will be bargains in REITS and other stocks..I like MMM, NNN, O, SPG< IBM, GOOG, AMZN, XOM, DVN, PDI.. just keep the dividends coming in, I did the same thing in March 2020..I believe if you buy quality blue chip stocks and try to get them on dips, you will be rewarded long term..I also have a good bit of cash in savings waiting for the 4-5% interest rates..I will take 5% return on half my money anyday..FDIC insured..monthly check.
Jussi Askola, CFA profile picture
@falconetti aanthony Thanks for sharing your picks! Feel free to join us for a 2-week free trial to access our Portfolio: seekingalpha.com/...
We put in a Double Bottom last Friday.
Full Steam Ahead to a 5000 S&P.
Jussi Askola, CFA profile picture
@HereToWin Impossible to make such predictions
mizesa profile picture
No this time is not different. Pull up a chart of SPG. What happened in 2008/9 when the Fed popped the last bubble it had blown by raising rates? It crashed 80%. This is not 2020. The Fed isn't going to print another $5T and lower rates to zero while inflation is 8%, so it is invalid to use that as a reference to now. There was no inflation then. Also look at how SPG performed prior to 2000 before inflation was controlled. Flat for decades. Enjoy the current bear market bounce, but unless the Fed actually does pivot, don't expect REITs to continue to rise.
Jussi Askola, CFA profile picture
Good luck with that! "tHis tImE iS DifFeRent" are the last famous words of so many investors. You are pointing out to one specific mall REIT as if it was representative of the entire REIT sector. Btw, inflation benefits REITs.
@Jussi Askola If inflation benefits REITs, why then have REITs been torched over the past year of inflation and don't give me the crap that inflation was transitory in 2021. REITs collapsed in 1974 when inflation hit 11+ %. So, 2008 did not support your feelings nor does the 1974 timeframe. Feel free to point to the anomaly of 2000-2003. If indeed inflation is on the way down and if the market has bottomed, REITs will soar but I am not betting on that.
Jussi Askola, CFA profile picture
@rip1955 Because there are other reasons why REITs have sold off. Recession fears... geopoltical fears... broader market sell off... etc.

Historically, REITs have generated high total returns during times of high inflation.
LongTimeReader profile picture
With every dip, since the beginning of 2022, SA value-stock authors have been recommending buying "these great stocks at bargain prices". Well, those of us who have been buying are running out of money! Maybe we should preserve what little we have left to get better price points, to lower our aggregate costs, and improve our total yields.
Jussi Askola, CFA profile picture
@LongTimeReader That is exactly why you should buy in many phases. You cannot time the market. It is impossible. We make small weekly additions at High Yield Landlord to make sure that we profit from the dips, but don't risk running out of cash early into the volatility.
@LongTimeReader Wall st pundits are great at spending other peoples money

Meanwhile most of them make their money selling subscription services and very little (if any) actually trading
William Cao profile picture
Very interesting Jussi!
Jussi Askola, CFA profile picture
@William Cao Thanks for your interest!
Great Swami profile picture
Bottom line is, everything is priced based on the level of interest rates, especially financial assets. So if something is fairly priced at $50 with prevailing rates at 2% and then rates double and prices fall by half, that isn't a crash, that's a readjustment to equilibrium. Cap rates on commercial properties are similarly adjusted upward and prices paid downward.
So don't be to hasty to jump in on seemingly bargain basement prices. Let the interest rate environment settle down. As Buffet says "price is what you pay, value is what you get"
Jussi Askola, CFA profile picture
@Great Swami There is more to valuations than interest rates. Interest rates may affect valuation multiples, but cash flow also matters, and cash flow is growing rapidly today as a result of inflation.
Dan McGuire profile picture
@Jussi Askola The key is debt and how it is structured. Renters, especially in a recession caused by rising interest rates, may not be capable of paying the rapidly rising cost of servicing debt. That squeezes the landlord's equity and could result in bankruptcy.
Jussi Askola, CFA profile picture
@Dan McGuire Debt is low at 35% LTV on average and maturities are long at 8 years on average. therefore, the impact is not significant
Peter Frorer profile picture
Interest rates are rising, that much we can agree upon. Given that rates are going higher and may or may not adequately tame the inflation and supply issues we currently face, why buy now? These reits you speak of may or may not have been propped up in value by the artificially low interest rates (near 0% with a residential mortgage rate at 3%) but those low interest rates certainly have risen. Seems like residential mortgages rates have risen by 133%, isn't that right more or less? I can see why energy stocks might defy the market swoon and a stagflationary recession, but I can not see why reits should be bought now. To suggest a cheerful top-down approach suggesting now is a good time to buy reits strikes me as emphasizing positive attributes to justify your feelings while ignoring possibly more relevant forces that appear to be very negative.
@Peter Frorer Well said. Agree
Jussi Askola, CFA profile picture
@Peter Frorer Because it is impossible to time the market and valuations are today already very low. It is explained in the article. REITs are not materially affected by low rates. This is a common misconception.
@Jussi Askola I've taken quite a bit of your advice over the last year and a half and I plan to take this to heart as well. However I do ask one question.. Do you still feel PAR is a good investment?
Jussi Askola, CFA profile picture
@JR Mendacium Yes, I still like PAR. Thanks for your interest!
birder profile picture
Well, I am mostly an REIT investor. I have been buying for about a month now. One of my favorites is SRC. Another is O. A third is STAG.
Jussi Askola, CFA profile picture
@birder Thanks for sharing your pick. We also like SRC but prefer some of its peers. Feel free to join us for a 2-week free trial to access all our Top Picks: seekingalpha.com/...
kos47 profile picture
“Sure, we might face some pain in the next 1-2 years, but does that really justify a 30, 40, or even 50% crash?”
Crash? It’s more like corrections if you ask me. For years we hear “stocks are overpriced” it seems they are coming down to where they should be or close to it.
Jussi Askola, CFA profile picture
@kos47 50% is not a correction. REITs were not overpriced prior to the crash
@Jussi Askola Everything was overpriced.

80% of all dollar’s ever made were printed in the last 3 years.
It’s fallacy to think the market was fairly priced after 12 years of ZIRP and the longest bull market in history.
LostinShalimar profile picture
@Harry Sack I have not heard the stat that 80% of all dollar’s ever made were printed in the last 3 years. Point me to that data, I need to read up.
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