Displaying items by tag: real estate
Income investors and many wealthy clients have struggled to find the outlet post-pandemic for relatively safe capital accumulation, but real estate investment trusts are that release valve. Reflation trade, stimulus-driven output in the economy, is driving a boom in commercial and residential properties. Reopening of the parts of the economy is driving REITs like EPR Properties, which hold movie theaters, ski resorts, water parks, indoor skydiving. It’s not limited to just adventure opportunities, data centers, cannabis cultivation, and crypto mining facilities are all burgeoning opportunities in REITs. David Auerbach of World Equity Group says that capital raising is ‘in vogue in the REIT sector because they proxy traditional capital appreciation vehicles. Ground leases in particular are one of the best investments in this sector. Along with additional measures that can be taken for a tax advantage, ground leases offer the upside of equity with maturity risks and capital structure to bonds.
FINSUM: The flight to safe assets is driving a groundswell of opportunities in REITs. With the economy reopening, and stimulus pumping through it, REITs are an opportunity to hit the safe return of bonds with the equity upside.
Whether investors—or Jerome Powell—like it or not, inflation is rising, and is as high as it has been in a generation. Sure, it could prove temporary, but in the near and medium term, investors are worried about it, which means it will be dictating returns. How to hedge inflation is a question that investors haven’t had to worry about in some time, so it is worth noting that REITs have traditionally performed very well in inflationary periods. Since many leases are tied to inflation, rents tend to rise directly in line with inflation, providing an excellent hedge.
FINSUM: REITs are not as well appreciated as an inflation hedge as some others asset classes, but that is exactly why they might be a great buy right now.
The latest CPI numbers have made a splash once again as prices make some of the fastest paces in growth since…see the full story on our partner Magnifi’s site
Residential real estate is one of the most popular alternative investments for Americans…see the full story on our partner Magnifi’s site
Income is scarce and investors need it more than ever (funny how that happens). Bonds look very risky given the direction of rates. So where can investors turn? Take a look at three different asset classes: blue-chip REITs, preferred shares, and property-backed loans. Blue-chip REITs can be a good investment because they have high yields (e.g. 4%+), but are still quality companies. They are also often trading at a discount because of the pandemic. Check out ticker “0”, Realty Income. Private property loans are another good option, yielding 8-12% , and often having good LTVs of around 60%, which means you have some significant downside protection.
FINSUM: These are some good alternative income options. Our personal favorite are the REITs because of their liquidity, but private property loans are a good option too, especially given the new economic cycle.