Please, won’t someone just buy some real estate stocks?

Investors putting money in private funds instead

TRD NEW YORK /
Apr.April 27, 2018 09:30 AM

Investors do not seem to be feeling real estate investment trusts these days, but they still love private real estate funds.

REITs are trading at a 16.4 percent discount relative to their assets, which is one of the biggest gaps ever outside of recessions, according to Green Street Advisors data cited by the Wall Street Journal.

Investors are much keener on private real estate funds that do not trade on the market, putting $71 billion into funds that closed last year, according to data from Preqin. Such firms had $1.2 trillion in real estate assets as of the end of 2016.

Two factors are driving this market oddity. Rising interest rates have caused investors to sell REITs, and they have been putting money into other investments that they think will do better than public markets, such as private equity and hedge funds.

They likely see private funds as less of a risk, as their values are less volatile than the stock market. REIT managers are also not likely to sell properties to close the gap, although some activist investors are working to force this to happen, notably at Forest City Realty Trust.

Third Avenue Real Estate Value Fund managers Jason Wolf and Ryan Dobratz recently wrote a letter encouraging REITs to consider becoming standard corporations to take advantage of the new lower corporate tax rate and maximize their shareholder value. [WSJ]Eddie Small


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Wesley Edens’s Fortress Investment Group picked up a mortgage bond portfolio for a steal (Credit: Drew Angerer/Getty Images, iStock)

Sharks circle as mortgage lenders shed portfolios at steep discounts

Commercial loans expected to suffer because of the pandemic (Credit: iStock)

March saw fewer CMBS delinquencies. That is likely to change: Fitch

(Credit: iStock)

Thousands of CRE borrowers call on banks for debt relief

Banks, funds, mortgage REITs, and agencies like Fannie Mae and Freddie Mac have all begun adjusting their lending approach in face of the economic downturn (Credit: iStock)

These are the sectors where real estate lending is still happening: report

Angel Oak Cos. CEO Michael Fierman and Flagstar Bancorp Inc. CEO Alessandro DiNello (Credit: Angel Oak, Flagstar, iStock)

Mortgage market dries up for unconventional home loans

A WeWork office (Credit: Alex Tai/SOPA Images/LightRocket via Getty Images)

WeWork offers rent discounts as incentive to secure long-term leases

arrow_forward_ios
Loading...