What is the appropriate cap rate for retail REIT's
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A grand total of 4 people replied. The board is really dead. ah.
Hi Kingran, I read almost all posts on this board but didn't respond because I am not familiar enough with nominal cap rates to give a good opinion. It seems to me that the capitalization rate you are willing to pay is very dependent on many factors including quality of management, quality of the real estate itself, type of retail being bought, whether there is opportunities for upgrade and rent increase. I don't typically look at cap rate as much as dividend payout, percentage to FFO, debt levels, growth, etc. I am wondering opinion many others who brouse here are in a similar thought process. To me a single number like cap rate would be equivalent to a PE ratio for a typical stock. I own some in the low single digits and some in the "infinite" category (no GAAP earnings). Anyway, no offense to the poll, I am just not sure I would take a lack of response as a lack board participation. RandyI am in a similar boat though trying to figure out if I can add to some of my REITS or whether it is late in the game.
I am around and reading also. Poll had no “in my pants” abstention option, and I believe we are no longer in an era where an overall cap rate across multiple REITS can make sense, and I doubt we will return to such a state for quite awhile.Large scale changes such as the pandemic shock and the 2008 crunch seem to be happening more often, and I do not see the “investing arts” as likely to settle back into old patterns for quite awhile. David fb
I would agree with the previous posts on why I didn't respond. Cap rates for REITs just aren't a thing that I use, and I didn't want to give an answer that I couldn't support.AJ
I think cap rate depends on many factors, such is location, (coastal or not), demographics (higher income within 10 mile radius?), perceived management ....klee12
It seems to me that the capitalization rate you are willing to pay is very dependent on many factors including quality of management, quality of the real estate itself, type of retail being bought, whether there is opportunities for upgrade and rent increase. OK. Personally I will penalize bad management but good management is not a big game changer in REIT's. within retail REIT's if you see there is a different between KIM and BRX on cap rate, even though I think BRX has much better prospect to increase its FFO for the next 3 years (I know I am saying this for sometime). Some of KIM overvaluation can be attributed the quality.But BRX deserves 5x multiple, like Single family? Do anyone see's anything that is interesting?I am afraid most REIT investors have abandoned the ship and went with AMC.
AJ, this is internet board, you should be allowed to take untenable, unreasonable position and valiantly defend it, with out the baggage of logic. :)Oh well boring REIT boards. Look for my next poll.
. . . or whether it is late in the game. ++++++It is ALWAYS late in the Game when the Fed is suppressing interest rates. Even the hint of a QE taper by the Fed results in a "Taper Tantrum" by the markets.sunraya man shunning interest rate "sensitive" investments
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