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No. of Recommendations: 30
I'm not front running the Fed but I think we can agree that the entire tenor of this board and REITs in general is it's a bad time to buy. Interest rates are going to go up, properties are expensive and so are REITs. I'm searching for good companies I want to own doing the work now, and anticipating I may have to wait on a buy.

MonsterFluff, with all due respect, I don't think I can agree (I don't know what others may think). I don't think it's a bad time at all to buy comm'l real estate or REIT stocks, and I don't think either asset class is bubbly or even overvalued. CRE is being priced today for unlevered IRRS of about 6%. Yes, that's a lower IRR than has been the case historically. However, bond yields are very low today and, compared with such bond yields, neither CRE nor REITs are expensive (especially as REIT stocks are trading at NAV discounts now). Spreads are within the historically "normal" range.

Now, we can argue forever about when and by how much bond yields will rise, which could put pressure on CRE prices especially if they rise a lot and NOI prospects don't rise enough to offset. However, I very much agree with Jim Luckett in his belief that yields might or might not rise. We just don't know. Pundits have been claiming for quite some time that yields "must" go up - but, so far, they have not. How long will inflation remain muted? How long will we remain mired in a 2% GDP growth economy? I don't know, and I'm not sure it's worth spending a lot of time trying to answer these questions.

I think the best approach to this conundrum is to assess one's risk tolerance. Personally, I am willing to accept capital losses on stocks I buy today, as long as the companies (including REITs) I invest in are doing fine and increasing their dividends and cash flows over time. But others, who cannot accept capital depreciation risk, might want to wait for some kind of major market decline - whether caused by a spike in interest rates, bond yields, recession, or major global hostilities.

We know that we cannot predict the future, and that almost anything can happen. Investing is a dangerous game, and it's always been so. Those who invest only because they are earning nothing on cash are not thinking clearly.

Ralph
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