More Downside in Equity REITs?

I think that depends on what type of Equity REIT you’re talking about. There really isn’t anything too new in this video, but in the process of highlighting continued broad downside risk in Equity REITs (recession=lower rents, lower occupancy & ultimately reduced dividends), there is also an interesting contradiction. If it will be “pretty hard to pay down….debt on assumptions” that rents and occupancy will increase, why is the “far better option” to buy AAA CMBS yielding 14% still not considered too risky?

Some Equity REITs may indeed suffer downside if the recession deepens, particularly those in more sensitive sectors such as retail and hospitality, but the fact that AAA CMBS is now considered the “far better option” suggests that some Mortgage REIT portfolios may soon bottom. Meanwhile, a very good buy-side analyst I know is buying all the Equity REITs he can get his hands on – in the apartment sector. More on that tantalizing topic to follow!