There's no lack of value in this bear market. But buying value without a catalyst for stocks to rise could mean sitting on the investment for a long time, with the opportunity cost that involves. One option is to buy cheap-looking, high-yield stocks.
Reits offer superior yields over traditional property investments. Earnings are also not as volatile as, say, a property developer because rentals are usually locked in for two to three years. Reits have largely been ignored due to fears over refinancing, and concerns over falling rents and occupancy. The latter two reasons are revenue related, but falling revenues are a problem for all sectors, not just Reits. Refinancing is certainly a risk as Reits are geared. But this risk can be cut by analysing the strength of the balance sheet, and also the sponsors behind a Reit.
The credit markets will not be frozen forever. When asset values rise again, the leverage effects of Reits will be huge and they will be an asset class to be loved again. And with a Reit, you are being paid to wait – not to be sniffed at in this near-zero interest-rate world.
http://www.moneyweek.com/investments/property/get-paid-to-wait-for-recovery-42614.aspx
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