Assessing How Much REITs Will Come Back

Nov. 16, 2023 6:30 AM ET, , , , , 53 Comments

Summary

  • REITs have experienced multiple expansion in their valuations, but recent market conditions have caused some of this expansion to be undone.
  • The future pricing of REITs will depend on interest rates and cap rates as much or more than on economic performance.
  • Across the range of plausible futures, dividend-based investment approaches such as REITs are far more robust than total return approaches.

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

Kwarkot

In the long run, assets that generate and grow cash earnings should see their prices move in proportion to their earnings. In the shorter run, though, prices vary as earnings multiples change. And the shorter run sometimes lasts many years.

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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 SPG, NNN 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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SPG--
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