Regardless of whether you choose to invest for the longer term or just want to make a short term play, the key is to take action before it’s too late.
some market watchers have warned that if the Fed does not cut rates fast enough, the Fed may be too late to prevent a recession. If the Fed cut rates fast enough, the S-REITs will transition of growth where they would see higher revenue, lower interest expenses and higher valuations. This would also allow them to carry out acquisitions to further boost DPU growth.Cromwell European Real Estate Investment Trust and ESR-LOGOS REIT are two REITs that can be viewed as shorter term speculative plays, as investors lean towards smaller logistics/industrial plays. These REITS have shown some resilience, with low-teens to high single-digits DPU decline in recent years, and may be an outsized beneficiary of any potential tailwinds.
Of course, some REITs may have seen their fundamentals permanently deteriorate and may not reach their previous highs, but upside potential still remains.
Volatility is both a trader’s best friend and also his worst enemy. Looking at the list, those S-REITs that have risen the most are those most deeply affected by rate hikes (as well as other factors) and are therefore likely to benefit more when rates are cut.
A smaller market cap is representative of a smaller REIT, which tends to exhibits more volatility as compared to blue chip REITs.
Finally A strong DPU growth, whether arising from organic rental reversion or accretive acquisitions, is the most important factor.
To consistently achieve DPU growth, a REIT management must score on all counts – capital allocation, capital management, asset management, and more.Furthermore, when looking at the 5-year performance, the REIT index is down 38% for the period, which indicates that there could be much more upside potential.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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