This is likely the primary reason why one of Darden's major investors, Starboard Value, has pressured the corporation for over a year to create
a REIT out of its assets.
Not exact matches
The author, Christopher Jones, points
out that stock owners already have exposure to real estate as large public corporations own most
of the commercial real estate in the U.S. Given the short history
of REITs, he is not convinced that they provide «meaningful» diversification and points
out that home owners already have enough real estate in their household
assets.
@BobC go find
out how many 10 - 15 % daily falls the market has ever had (very few) then factor in your
asset allocation with fixed interest and
reits and you'll find the chance
of losing 10 - 15 % in a day with a properly built portfolio is about 0 %.
This disparity results from the fact that
REITs: 1) often focus on institutional quality
assets and markets that have relatively low yields; 2) have corporate overhead costs to cover; and 3) want to avoid the risk
of having to lower their dividends in the future — and thus only pay
out a conservative level they believe to be sustainable.
A
REIT won't grow unless its management team knows how to get the most
out of its
assets.
«We are not seeing small tenants work their way
out once they fall behind in rent,» remarked Johnny Hendrix, Weingarten's executive vice president
of asset management, during the
REIT's third quarter earnings call.
The
REIT rolled
out a strategy that is a critical component
of its
asset intensification program.
And so - called momentum investors, those who look for a quick fix before moving on to opportunities in other
asset classes, are rotating
out of the
REIT sector, according to Litt.
At that point, the
REIT might buy
out of the joint venture and add the
asset to the balance sheet.
The company uses the capital infusion to pay off the old debt and fund new acquisitions, which enables the
REIT to generate new value for shareholders
out of a mature
asset.
This was true with MBS tranches and CDOs, and this will also be true with SFR
REITs and whatever derivative products are created
out of that
asset class.
Investors should never lose sight
of the fact that real estate is an actively managed
asset: a high - quality, well - managed property — which describes most properties owned by
REITs, certainly including retail properties — is more likely to maintain strong occupancy and favorable NOI growth than a property whose owners are merely waiting
out the life
of their private equity fund before selling.