Expert: REITs Are Overpriced, Will Suffer From Rate Hike
This holiday season isn't so merry for REITs, CEO at Third Avenue Management David Barse says. His company owns real estate operating companies rather than REITs themselves. And as an investor, Barse wants bargains.
"REITs are overpriced," David tells Bloomberg. Securities like Simon Property Group trade at a premium to net asset value, he says, making it a no-go for value investors. "That's the beauty of real estate. It's the simplest form of analysis."
And the pending interest rate hike won't help, either, Barse says. "It will impair the distribution component," which will lead to a drop in the trading price.
But the hike could work in investors' favor, he says. By looking at stocks trading at discounts—or going for assets less focused on the income aspect—"we're going to continue to benefit from the [overall] growth." [Bloomberg]
