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

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

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

Portrait of a deal junkie: The Joseph Tabak story

Portrait of a deal junkie: The Joseph Tabak story
Matt Borstein, Deutsche Bank’s global head of CRE, is moving to Oak Hill Advisors (Photo via Deutsche Bank)

Deutsche Bank’s CRE head moves to Oak Hill Advisors

Deutsche Bank’s CRE head moves to Oak Hill Advisors
Bank OZK CEO George Gleason (Unsplash; Bank OZK)

Bank OZK’s lending up in third quarter

Bank OZK’s lending up in third quarter
WeWork CEO Sandeep Mathrani (Wikipedia Commons; iStock)

WeWork bonds, already junk, downgraded by Fitch

WeWork bonds, already junk, downgraded by Fitch
(Getty, iStock)

Cash-strapped borrowers are increasingly giving keys back to lenders

Cash-strapped borrowers are increasingly giving keys back to lenders
Craig Solomon

The REInterview: Square Mile’s Craig Solomon on his big bet on studio space, today’s capital stack and the dangers of socialism

The REInterview: Square Mile’s Craig Solomon on his big bet on studio space, today’s capital stack and the dangers of socialism
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...