WS, If they are smart enough to sell properties at this manic top in the real estate market, then they are definitely buys. However, if they are holding bloated properties waiting for the greater fool to show up, then they scare me.
I think that REITS are essentially closed end mutual funds, so selling above book value is similar to a CEF selling at a premium. The fact that they do sell above book is an indication of the way the public stretches out for yield.
As long as risk-free rates remain low, these things are golden. But, the first decent uptick in short term rates and they die. Since we are at a multi-year low in rates right now, I wouldn't want to own them straight out, no matter how relatively attractive they are. But that is predicated on the idea that I think rates are going much higher over the next five years. However, if you were to buy some of the cheaper health care REITS and short the tax scam Reits, ala HOT, in a paired trade, I think you would have a nice deal. And, if you disagree on rates, and you believe they can drop even further without causing deflation (another REIT bugaboo), then they may be a buy. You have certainly identified some of the cheaper players.
MB |
