The rally continues but REITs excluded

As the broader markets continue to rally, REITs have been left in the dust.  The RMZ closed the week at 1100 even as compared to well over 1300 at the peak in May of 2013.  This leaves us more bullish on the sector as FFO/share growth has been moderate to strongly positive over the period.  Essentially, REITs have gotten cheaper.

Occasionally we perform analysis on the kurtosis of REITs, or more specifically the distribution of trading multiples among REITs.  As compared to previous analytics there is a value skew in which the raw number of REITs trading at cheap multiples has greatly increased.  For example, there are now 84 REITs with multiples between 8 and 14 times 2017 estimated FFO.  This increased number of value stocks provides enhanced opportunity to move up in quality without having to pay up for it.

Commentary may contain forward-looking statements which are by definition uncertain.  We retain no obligation to update or correct forward-looking statements should the available information change.  Actual results may differ materially from our forecasts or estimations.

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