Long
Retail REITS
More of just something to keep an eye on, as a sector within REITs, retail has been offering some of the highest dividends which stems from the higher cap rates required by investors for the sector ie more NOI per dollar invested.
With the coronavirus, these REITs are going to see tenant default and thus their income decreases. When it comes to tenant roll over, again that will decrease --> which is why these have fallen more than other REITs.
I would need to look into these a little better but of these, O is single tenant focused which can be both good and bad. Attached is a link to their top 20 holdings: realtyincome.com/portfolio/top-20-tenants/default.aspx . Ideally, it would be more investment grade tenants but between AMC bonds selling for ~50 cents on the dollar and regis likely not doing much better, there are some questions about the longer term viability of some of their tenants and they too will have to deal with default and tenant roll over.
Overall, we're still looking at catching a falling knife so loading up on any of these or positions in general is likely imprudent but if you have cash available entering positions over the next 5-10 weeks, depending on how the coronavirus ramps up or slows down as well as externalities caused by the sometimes mandatory curfews/restrictions on business pans out, could at least leave you saying "At least I bought when it had already dropped 50%" but optimistically could result in buying at 2008 levels for some of these. If interested, here is a link to the buffet indicator which compares equities to GDP advisorperspectives.com/dshort/updates/2020/03/03/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator
I would still be wary of a debt crunch however, --> ie why some mortgage reits are offering 30-40% dividends prior to any updates on tradingview's div yield built in. This would have pervasive effects on anyone's portfolio so it's hard to say what would be best. That said, REIT debt is another possible position to play but that would only be prudent so long as you find a firm which is not too levered as some of these reits have taken full advantage of cheap debt.
With the coronavirus, these REITs are going to see tenant default and thus their income decreases. When it comes to tenant roll over, again that will decrease --> which is why these have fallen more than other REITs.
I would need to look into these a little better but of these, O is single tenant focused which can be both good and bad. Attached is a link to their top 20 holdings: realtyincome.com/portfolio/top-20-tenants/default.aspx . Ideally, it would be more investment grade tenants but between AMC bonds selling for ~50 cents on the dollar and regis likely not doing much better, there are some questions about the longer term viability of some of their tenants and they too will have to deal with default and tenant roll over.
Overall, we're still looking at catching a falling knife so loading up on any of these or positions in general is likely imprudent but if you have cash available entering positions over the next 5-10 weeks, depending on how the coronavirus ramps up or slows down as well as externalities caused by the sometimes mandatory curfews/restrictions on business pans out, could at least leave you saying "At least I bought when it had already dropped 50%" but optimistically could result in buying at 2008 levels for some of these. If interested, here is a link to the buffet indicator which compares equities to GDP advisorperspectives.com/dshort/updates/2020/03/03/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator
I would still be wary of a debt crunch however, --> ie why some mortgage reits are offering 30-40% dividends prior to any updates on tradingview's div yield built in. This would have pervasive effects on anyone's portfolio so it's hard to say what would be best. That said, REIT debt is another possible position to play but that would only be prudent so long as you find a firm which is not too levered as some of these reits have taken full advantage of cheap debt.
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