REITs: How Much Is Inflation Protection Worth?

Feb. 24, 2023 6:30 AM ET, , , , , , 41 Comments

Summary

  • Multifamily REITs are rightly understood to provide excellent protection from inflation and are often priced quite high compared to REITs from other sectors, such as net lease REITs.
  • They are not priced so highly at the moment, which leads some analysts to expect strong gains from here.
  • From the perspective of inflation, the question is how much that protection is actually worth.
  • 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 »

REIT. Concept image of Business Acronym REIT as Real Estate Investment Trust. 3d rendering

Kwarkot

Working on a very deep look at AvalonBay (AVB) led me again to my conundrum about the Multifamily REITs. They are often pricey.

At the moment, the average ratio of Price to forward Funds From Operations, or P/FFO, for these REITs is 16x. For

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This article was written by

6.43K Followers

R Paul Drake spent decades developing data-driven models in his work as a physicist, and now brings the perspective of a retiree to his investing and writing. He is a life-long reader of economics, finance, and investing, and embraces value investing.

Paul is one of the analysts at the investing group High Yield Landlord, one of the largest real estate investment communities on Seeking Alpha, with thousands of members. It offers exclusive research on the global REIT sector, multiple real money portfolios, an active chat room, and direct access to the analysts.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of AVB, EPRT, SRC 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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