Thesis driven investing in reits

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In reits thesis driven investing sacramento kings vs mavericks

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Investors do not see past the most recent recession, which happens to have been the result of overleverage and a banking crisis. It led to a real estate crash and REITs did poorly. However, unless you expect another subprime crisis, it seems irrational to only look at one recession to assess results. Each recession is different, and on average, REITs have been among the strongest performers and provided superior downside protection during recessions: source This also makes logical sense.

REITs generate steady cash flow from rents that are contractually guaranteed for many years to come. REITs are widely diversified, and therefore, the cash flow does not change much during a recession. The long lease terms are here to protect the landlord.

Other businesses may see their sales plummet overnight. This cannot happen to a REIT which has 10 years left on its leases. Even during the sharpest real estate crash of mankind, most tenants kept paying their rents in full and on time. The Bull Thesis in a Nutshell We think that REIT investments are poised to generate higher total returns — with more income and less risk — than most other financial assets during the coming decade.

Stocks pay even less than that. And cash pays close to nothing. Real assets are some of the best hedges against the risk of accelerating inflation. When you drive down the street, and you see the office building, you know that it's real and tangible. It has tenants paying rent. It has value. And it's simple to understand — unlike most other businesses.

It helps to remain disciplined because we know that real estate is not going anywhere. We need apartment communities, we need warehouses, we need hospitals. Their owners generate stable income that's defensive to cyclical turns. This is not just an empty statement.

The market has many things to worry about in the near term whether it's the Coronavirus, trade war, presidential election, etc. And therefore, we expect high volatility in While we do not know exactly what the future holds, we are smart enough to recognize this limitation and prepare for all possibilities. Therefore, we are taking the following steps to hedge our portfolio against this uncertainty while still seeking to generate attractive returns today: 1 — Continue to Steadily Invest in REITs We will continue to allocate more and more capital toward REITs.

Undervalued opportunities remain abundant among the smaller and lesser-known REITs and we will take advantage of them. We believe that this is cheap on an absolute and relative basis. We are currently eyeing six potential candidates for Portfolio addition at High Yield Landlord.

We love the short duration because it allows us to get our money back very quickly to capitalize on the latest opportunities. PK , etc. In the meantime, we earn good income. With REITs, you should never ignore international opportunities because this is where we often find the best opportunities. Think about investing in California 20 years ago. We believe that there are similar opportunities out there in certain emerging markets. REITs are not particularly sensitive to interest rates.

REITs provide good downside protection during recessions. What happens next is uncertain, but we are well prepared to face volatility and will continue to gradually build an ever larger REIT portfolio. We are able to narrow down these trends into patterns that turn into investing theses. These theses guide our investment decision processes, allowing us to determine which companies will be successful and which will not.

Based on experience, these are the three reasons thesis-driven investing helps predict the future of a successful investment: We know which companies will be successful even before they do Once we develop a thesis about a particular market, we look for companies whose unique problem-solving strategies align with our underlying assumptions about the direction of a given market.

Many times we end up finding those companies before they even come to us. Take Skycatch as a good example here. After they told me about Skycatch, I called founder Christian Sanz and we quickly realized that we were a mutual fit.

We know what makes for a successful partnership People matter. That is one of the most steadfast investment rules across all types of investments, public or private. Many times it can be like finding an old friend.