No. of Recommendations: 5
From Seeking Alpha Reitster, Jussi Askola:

Summary

REITs often get a bad reputation for the massive volatility of 2008-2009.

In reality, REITs have done much better than most stocks during recessions and outperformed in late cycles.

Today more than ever, REITs are well-positioned to outperform in this late cycle. Balance sheets are strong, fundamentals are healthy, and valuations are reasonable.

The great financial crisis really hit the REIT market with a perfect storm. The housing market crashed, banks stopped working, and suddenly refinancing debt became much more difficult or even impossible in many cases. REITs were forced to cut dividends not necessary because of operational issues, but because they needed liquidity to deal with maturating debt and other uncertainty.

Dividend cuts, combined with a housing crash and troubled banks, led to massive volatility across the REIT sector and it continues to negatively affect the sentiment of REITs to this day.

With recession fears starting to spike again, we have heard a few market pundits recommend staying out of REITs altogether.

We believe that this is very short-sighted. These investors still see nightmares of 2008-2009 which led to the sharpest real estate crash of mankind. In reality, this was a rather exceptional event that is unlikely to repeat itself in the future. Each recession is different, and REITs have fared way better than regular stocks during most recessions. Researchers from Cohen & Steers note that:

"REITs have outperformed the S&P 500 by more than 7% annually in late-cycle periods since 1991 and have offered meaningful downside protection in recessions, underscoring the potential value of defensive, lease-based revenues and high dividend yields in an environment of heightened uncertainty."


Read on:

https://seekingalpha.com/article/4291542-reits-recessions-ta...

Interesting read.

David
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