Mistakes Young REITs Make

Mar. 19, 2025 7:30 AM ET, , , , , 28 Comments
(11min)

Summary

  • Newly public REITs often carry too much debt, influenced by private equity origins, leading to financial instability and the need for deleveraging.
  • High dividend payouts can hinder growth; successful REITs maintain lower payout ratios to invest retained cash and ensure sustainable earnings growth.
  • Quality of earnings is crucial; persistent property lease earnings are preferable over ephemeral earnings from construction, loans, or asset management.
  • Camden Property Trust, Regency Centers, and NNN REIT exemplify strong, financially sound REITs with prudent management and growth strategies, making them solid investment choices.
  • 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 »

A 18 month old baby boy playing with colourful building blocks

Catherine Delahaye

Most humans learn by making mistakes. We are really poor at anticipating in advance the consequences of our risky behavior. And since it is humans who run organizations, organizations are bad at this too.

In the specific case

If you want to access my entire Portfolio and all my current Top Picks, feel free to join ‘High Yield Landlord’ for a 2-week free trial.

We are the largest and best-rated community of real estate investors on Seeking Alpha with 2,500+ members on board and a 4.9/5 rating from 500+ reviews:

You won't be charged a penny during the free trial, so you have nothing to lose and everything to gain.

Start Your 2-Week Free Trial Today!

A close-up of a logo Description automatically generated with low confidence

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 CPT, EPR, AHH, NNN, REG 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.

Recommended For You

Related Stocks

SymbolLast Price% Chg
REG--
Regency Centers Corporation
AHH--
Armada Hoffler Properties, Inc.
CPT--
Camden Property Trust
WPC--
W. P. Carey Inc.
EPR--
EPR Properties

Related Analysis