NAREIT has an article on how REIT CEOs reacted to COVID19 and what they have learned.
In sum, they were flexible and changed-
Well- That was sweet and simple-
Now, here is what I have learned following REITs throughout the pandemic-
Cash is king. Many REITs cancelled or cut dividends to conserve cash. And they withdrew the credit facility to survive. They know what the financial crisis has done. So many just jumped and got the cash. Very wise. I believe REITs will be more prudent and have more liquidity from now.
Kind Banks. I was shocked at how many banks allowed forbearance and tolerated covenant violations. Thank God that the banks didn’t want the world to burn and end. In stark contrast to the financial crisis of 2008, banks are well capitalized and were able to give some breathing room to the REITs. Yup, good lesson learned from the crisis. And REITs will also have hold more cash from now on.
Withdrew management guidance but provided updates. Majority of the REITs withdrew their annual management forecast. It makes perfect sense given that we don’t know how long the pandemic would last and what kind of drastic policy the government would launch. But more interestingly, many REITs provided monthly updates about occupancy and liquidity. That was very helpful. These updates were extremely helpful to me as I invested based on the occupancy rate and liquidity. That is how I was able to hold on to #BRG and #IRT.
I doubt the monthly updates will stay because of the high proprietary cost- But love it when I see it- Very useful.
So what are my thoughts about REITs?
I think there is nice opportunity to get some high returns once COVID19 subsides either by vaccine or living with COVID19 by just opening the economy.
You can see Vanguard Real Estate Index Fund (VNQ) dropping like a rock in 2008 and recovering nicely later.
I believe that it will be similar this time.
I am long REITs. I long housing REITs, #BRG and #IRT.
I also own mortgage REITs, #ANGC and #NRC, for dividends.
I am also betting that retail REITs, #SKT and #WPG, will recover somewhat-
More optimistic about #SKT. #WPG is distressed and I am mainly swing trading (I have a big hole in my portfolio).
Thank You Jesus for all Your wisdom. Let us be humble and be thankful for everything. Amen-
Rejoice at all times. Pray without ceasing. Give thanks in every circumstance, for this is God’s will for you in Christ Jesus.
1 Thessalonians 5: 16-18