Largely agree with your takes but that seems to be a current view and i worry about some of the markets you are extremely bullish on.
No comment on data center but for industrial this has probably been the strongest performing sector in the last few years with a ton more completions and slowing absorption and incredibly low availability rates. The trend on availability rates has been upward for a year or so and generally being at such a low level seems hard to maintain. TI costs can also be incredibly substantial due to the high tech nature of todays industrial tenant needs.
Hotel is an area that im very interested in as cap rates have increased significantly while others have gone lower. Im cautiously optimistic that this trend may reverse, but its also high risk in the event cap rates increase and Hotels grow even further. At a certain point though Hotels generating cash flow will be able to be had for so ridiculously cheap long term investors can make a killing.
Definitely agree with you regarding industrials, STAG was one of the best purchases I made in the REIT world. Lucky to get some at $18, I like the portfolio structure and their model of going after the secondary assets/markets where cap rates are a little better.
Hotels are going to be the same as some of the retail REITs we are seeing today. I think there are some that have incredibly strong portfolios of properties/assets/ample cash flow and strong tenant bases that are absolutely getting blood bathed with the broader market.
Can anyone can simply explain what drives the returns of mortgage REITs? I invest in a lot of preferreds and structured credit vehicles but haven’t gone into mortgage REITs b/c I can’t figure out what the drivers are of these. Making sense of their financial statements is a major challenge. There seem to be different varieties of them, such as mortgage servicers in addition to those that invest in the actual structured products.
Are there examples of pure plays in the public markets that invest in subordinated tranches of CMBS? The companies I find are direct lenders in CRE projects and/or are invested in the senior tranches. Who are the investors in equity and mez tranhces of CMBS? Are these just specialized hedge funds and real estate investors, or are there publicly traded examples? I can’t find any.
Annaly Capital (NLY) - mREIT focused on buying MBS/CMBS securities and uses swaps/options to hedge the portfolio against interest rate risk (http://www.annaly.com/strategy)
Do any real estate people have a take on data center REITs? I bought a 5.25% preferred for Digital Realty recently and am entertaining buying equity for that and another data center REIT. It seems as though there is a real secular growth story behind these. I really like the hard asset and income producing investments but have stayed away from traditional REITs so far but am intrigued with the data centers.
just going to bump this. public apartments reits were recently down 40%. their leverage has gone down ever since. something like 30% LTV atm. I just got familiar with the crowdfunding real estate space and they do typically push up ltv from around 65% to 80%. seems like the future for these public reits is to unload them to the risk takers.
