REITs, from Nigel Davies

October 10, 2008 |

I don't know about the US, but over here in the UK REITs are now trading at a huge discount to presumed asset value. Looking at some charts, they also seem to be leveling off. Any views on REITs as an investment right now?

Al Humbert writes:

Just happen to be following hospitality REITs, and they are getting pretty cheap by any measure. Many are priced such that if the dividend is reduced by 50%, they will still yield double digits or more. Also, most if not all have market caps below net equity, some as much as 50% below. Equity is mostly the value of the properties, but even if that is reduced substantially, there is still a lot of value. A big concern is refinancing existing debt, but many REITs have debt structures that do not significantly re-fi until 2010 or even later.


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