ALPS Active REIT ETF
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Interesting chat this, and something I’m looking at but with OEIC’s, ETF’s and investment trusts. Sorry for being slightly off topic but my current allocation is roughly: Core investments: 1: L&G Global 100 index (Passive OEIC) 2: SAINT (Active Managed “Global equity income IT”, here’s where it get’s cloudy - L&G 100 a concentrated portfolio, large cap global, but I’d say nothing alternative there. SAINT though whilst mostly global listed, has small allocations to infrastructure and property (property third party managed, shares and direct investment), and also private equity. What I class as “alternative”: 3: SMT Public/Private trust 4: Mobius IT - EM IT active management, are EM alternative? I’d say not 1: EGL - Global utilities and infrastructure, AM, does what it says on the tin, albeit with a renewable energy slant, but not an ESG fund as such 2: TR Property,AM IT investing in property Equities AND Direct property. Alternative? I think so but are equities and direct property alternative? 3: WCOB Wisdom tree commodities ETF, alternative I’d say but everyone shoukd have a small allocation? 4: SONG - Royalties IT, definitely alternative 5: SSIT - Public/Private equities IT, all companies involved in space, actively looks for start up like a VCT, so I consider it alternative, but does that make SMT alternative? 6: - DAGB - basically a crypto ETF BUT invests in companies involved in crypto, not direct “coins” etc. Alternative? I’m also looking at octopus renewables VCT, which I’d definitely consider alternative. I also have/had some money in an intelligent ISA (IFISA) which invested directly in property (property and developments), that went bust though, so be careful with alternatives away from shares and the usual routes. Previous: TREG: Global “passive” property, all in REIT/Property Public equities so I’d say NOT alt FOGB - future of food ETF - all equities but very narrow focus, alt’?
Don't worry, I did exactly the same, like almost on point, But i slowed down on that and switched strategies, I went basically full in Palantir and a small cap OTC stock, I don't regret Palantir, the company itself has been up to my expectations and did everything( almost, 95% of the time ) as I expected, I can say im happy to hold it a loong time, been in there since 2020 and kept averaging and getting more slowly, the OTC one ehhhhhhhh..underperformed in my view though I can't it's gone so I am holding. after a bit of hiatus, delving into crypto getting into Algo and KDA, doing a bit of monkeying around which was fun, I came back and made a proper portfolio now with a monthly auto transfer and tried to sort out my finances to stop being stupid :p so im with you on this PLTR and Bigg are still my biggest though i plan on making a big REIT and ETF portfolio
Deficient issuer on nasdaq below continuing listing standards, according to my screener, but it looks like the notice was given back in february and by the current price it's over the 1.00 requirement for now. It's a mall REIT, which is probably part of why it's been smashed up so much. Not tasty enough for most firms to issue an opinion, underperforming the sector, and the one firm report I could find from Zacks shows the return on equity percentage at ‐567.66٪, and debt/capital at 99.62٪ which is impressive but not in a good way. I wouldn't touch it with a ten foot pole.
A lot of alternative investments are non producing assets, meaning they hope to gain in some speculative way. Say a managed futures fund that buy and sells commodity futures. These often have high fees of around 1-2% and in theory do not have an expected return other than you hope your manager outperforms another manager as all derivative investments are a zero sum game by definition. If you held for 20 years, your return overtime will probably be -1-2% per year as the strategy doesn't actually gain value fundamentally and you pay fees either way. Low cost alts like gold can be ok as the fees don't delete much of the gain that they might gain from inflation overtime, but I wouldn't expect high returns from a non-producing asset. People often consider real estate as an alt, but I consider that either as an equity or a bond just depends on how you look at it. If you invest in a commercial REIT you just hold equity in a real estate company, no different than any other company in that it's performance will ultimately depend on management and success of the company.
Understanding their financing is key. Real estate is typically highly leveraged, and since no one's seen rising rates for a very long time, there are things that can break. To have a fundamental view on a REIT requires understanding what they owe in debt financing, and how that may change in the changing environment. You want to understand the money they've borrowed as mortgage debt and as bonds, and look at what the terms of that debt looks like. So, for example, if you really want to understand a REIT as a business, getting into their financing is critical. Conversely, if you're a manager at a REIT, a big part of how you make the earnings is going to hinge on financing activity. So, for example, you can drill down on Kimco -- they break out the indebtedness attached to all their properties - the secured debt -- as well as the unsecured general corporate debt. You can see a listing of the amounts and maturities, they give a full financial statement: [https://s1.q4cdn.com/944058265/files/doc\_financials/2022/q1/Full-1Q22-Supplemental-Linked-(1).pdf](https://s1.q4cdn.com/944058265/files/doc_financials/2022/q1/Full-1Q22-Supplemental-Linked-(1).pdf) and then a listing of the specifics of the debt in spreadsheet format, very useful [https://s1.q4cdn.com/944058265/files/doc\_financials/2022/q1/2022-First-Quarter-Supplemental-Information-Debt-Excerpt-(xls).xlsx](https://s1.q4cdn.com/944058265/files/doc_financials/2022/q1/2022-First-Quarter-Supplemental-Information-Debt-Excerpt-(xls).xlsx)
But after you account for property taxes, insurance, maintenance, etc of owning an actual property, the leverage factor is much closer to a REIT, as REITS already have all of that accounted for into the price and dividend payout.
Diversified real estate (i.e. a REIT) with low leverage generally will keep up with inflation over a long period of time, but that’s about it. Real estate doesn’t offer much innovation or new technologies or ways of doing things which improve the economy. It’s more like a commodity than a long term growth engine. Concentrated real estate can do much better or worse depending on property type (warehouse, office, residential, etc), location, leverage/debt, taxes, and value added through cost effective renovations or design improvements. If you want to do direct investments in real estate it’s best to bring something to the table such as an eye for design, contractor skills for renovations, an understanding of zoning and development processes, or an ability to predict the next “hot” location.
Steezywild 23 year old with minimal investment knowledge prediction of the week #1 - REIT stock EQIX will drop over the next week. Buy puts. Up 9% over the last week but down 2.9 in the last 3 months? Face it. REIT investors are looking for high D/Y and Equinix’s 1.76 falls FAR behind lower priced competitors while subject to the same taxes and demanding a huge price of $689. Fuck EQIX. Thank you. I’ll be back next Friday night.
Thanks for reply. I'm trying to follow it but there's still some cognitive dissonance going on w me I think. 1. Yes, I hold TLT bc the goal was the diversification against equities. But my thought was that the majority of time the US economy, from an avg person's POV, isn't hanging on every word and policy move of the Fed. This particular time (like only a handful before it) is an outlier where QE broke stuff for the last 2 years and now Fed is rushing to contain our 8 of control inflation. And that led to a painful time where equities, bonds, commodities, REIT are all in "down only" mode. And I'm ok with that, it happens. However, since I'm not a professional (not that it's much of a difference) I'm not trying to guess the market and trade in and out of the above mentioned bc I'd likely end up not invested at the wrong times and no one knows where gonna happen for sure, like today's rally. Except, as I said above, I feel like we were given one freebie to help mitigate losses- The Fed was direct in saying yes, we're going to see hikes, a lot of them, at a minimum of 50bps for the next X months. So, while I understand, I think, what you said about NAV and coupons, it still seems to me that I should have taken the freebie, sold TLT after the first FOMC meeting this year and waited for some pricing stability in a few months, then repurchased something like today. I am still missing something in the sense that if..... Wait. I think I may have just got it. Lol. If one has a long term horizon, esp if intentions are to pass my holdings on to family when I'm gone, that means hypothetically that I'd never sell, and therefore not realize the -20% for example that I'm down as of today. Yet I would be earning coupons the entire time which is income, regardless of the price of TLT fund? So it's a fixed income coupon not dependent on TLT price? Is that correct? If so, should I be taking the coupon payments as cash? Or continue receiving them as shares of TLT for compounding effect? I'll stop here bc need to know whether I may have finally grasped why I shouldn't be so concerned with the Unrealized losses. Though, I'm still finding it really hard to justify that the better move, at least between Jan and July wouldn't have been selling off at 140 and buying back around 100-110 around now. It was a near certainty, and I'd be holding quite a bit more TLT had I traded out of that ~$40 loss from 140 to today. Again sorry for length, I'm really trying to understand this and put it to bed. And yes, it is psychological not easy to see that my ROTH portfolio has only one position that's at a heavy loss and of all things, it's the "safest" thing in the folio, bond fund. But yeah, let's go with the idea that no, I never planned to sell it (except this one swan type of event that happens every decade or so) Thx!
The only way to even get close to that, which carries substantial risk, is leveraging a personal loan to invest the proceeds into a leveraged REIT fund. You're obviously not getting the same leverage multiple or capital capacity, but it is something. Problem is, personal lending rates are going to be a minimum of ~7% now, dependent on the borrower or course. Wild to see how much the rate environment has changed in less than 6 years considering I have a 2.990% loan on a fucking motorcycle as an example.
Domestic REIT divs are eligible for §199A treatment. Most people can generally deduct 20% of their REIT dividends. The treatment is not as great as qualified dividends but all things equal on your tax return you would prefer REIT income over non-qualified dividends.
The homeownership game is really a mix of large leverage, forced savings and potential tax benefits with the added benefit of generating generational wealth. A REIT has some of the properties like stable cashflows in the form of (sometimes montly) dividends. BUT you have no control over what properties you are buying, not all of the tax-benefits and most importantly, you are direct subject to market and price fluctuations. The returns on REITS do reflect that, all while you still have to pay your rent. If you want to go long real estate you could buy residential REITs but I would be very careful right now as the housing market is crazy expensive, people are levered to the tits and nobody knows how and when inflation will be back under control. That makes the interest rate environment completely unpredictable, which in turn makes investing in real estate more risky than it was historically. In the long run you will probably be fine. Just don't forget to do your own research before you start buying stuff.
>The best residential REIT is the one you dont buy. > >Probably neither are a good idea in a recession though. "U.S. 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" - Quick google All part of a diversified portfolio. Don't give advice on stuff you have no idea about.
No. The question in this post is whether REITs are a viable replacement for homeownership in terms of returns. My answer is no because you can’t get the same kind of leverage for cheap and even if there was something like a 10x leveraged REIT the risk-adjusted returns would be VERY poor compared to owning a home. Evaluating investments needs to take into account the returns per unit of risk taken
Rents typically follow inflation, and inflation has picked up by 5 to 6 points since the pandemic ([and rents have gone up likewise](https://tradingeconomics.com/united-states/rent-inflation)). That's way more than the rate increase. Many corporate lease have an inflation-indexed adjustment (and/or a % of sales for retail) though that might vary depending on country and company. On the financing cost side, REIT are partially leveraged, so for ex with 50% leverage, a 2 point rise in financing cost means 1 point impact on yield. REITs also have debts of various maturity, so the rate increase only has immediate impact on short term financing. Any manager worth his salt would have already stretched his average debt maturity knowing rate increases are coming which would dull the impact further. For ex Simon Property for ex issued back in January [debt due 2032 at 2.65%](https://finance.yahoo.com/news/simon-property-spg-taps-debt-212009767.html). For 10 years, they are gonna pay that low interest rate on that 700M debt regardless of what the FED does. Not only that but while rate increase is negative short term for property values, long term property values will also benefit from inflation, so long term this is positive for REITs NAV. Now that's not to say the price won't get hammered next week by the shitty market sentiment, but I don't think overall macro is negative for REITs.
There's a big difference between owning a REIT and owning the actual real estate, A REIT will spit out dividends and has potential appreciation of the underlying holdings. But you get no leverage. The REIT may use leverage to acquire properties, but you don't have leverage, you have shares of the REIT which will increase or decrease with the market and provide dividends (like any other stock). Owning RE is quite different. Buy a 100k property with 20k down. Sell the property for 120K, you made 100% because of leverage (less transaction fees, taxes, etc.) The Managing Partners of the REIT may enjoy some of those benefits but LPs don't get that type of leverage. The MPs charge the REIT certain fees for management. They can make a ton while LPS get the dividends.
I wasn’t even talking about this property earlier, you’ve derailed this conversation so much you don’t even know what you’re referencing anymore. Comparing apples to apples, I was comparing a real estate purchase 10 years ago, like my condo, to buying a REIT 10 years ago. In regards to my house, I have more money now than I did a year ago and even lowered my cost of living during the time I owned it so what do you call that? You’re missing the forest for the trees here.
30 year mortgages are more than just "investing in real estate." There are great tax benefits, you get an insane amount of leverage an in asset that is nearly guaranteed to appreciate a great deal over any multi-decade timespan, you can lock in a low interest rate on that debt for decades, you don't have to pay any rent during that time, it makes retirement planning way easier once your house is paid off, etc. If you rent a place and invest in a REIT, you'll capture a small amount of gains if the real estate market goes up, but you won't get any of the primary benefits of traditional homeownership.
residential real estate has about 4 to 6% ROI , before taxes, without a REIT. The best residential REIT is the one you dont buy. If you really want to go REITs, get a commercial one. Probably neither are a good idea in a recession though.
Eh, im down about that much too, and i swapped my portfolio to that while holding the other stuff that is down, because I don't really care, my target is still the same and nothing really changed, just the market got hit and the economy, doesn't mean I cannot personally wait But i also changed the composition because i got my prefered position and loaded up on what i liked, now im diversifying up, both REIT and ETF's, even crypto with KDX but that i don't need to talk about here I just automated monthly payments into a portfolio and don't look at it.
It depends what assets the REIT has. I only have 1 REIT and in their last earnings call they were asked about their clients and high inflation, they said that they analyzed 150 of their clients (85% of revenue) and their balance sheet and found out that even if they couldn't pass costs to their own customers (which isn't the case) and with 300bps higher than the interest was in May (4% interest rate) then they will only have like 11 with delayed payments out of those 150. You can read this quote I posted for someone from that earnings call: https://www.reddit.com/r/dividends/comments/vidiis/comment/idd5mi4/?utm\_source=share&utm\_medium=web2x&context=3
O is a particularly good REIT because of their single tenant, NNN, lease structures. They have desirable locations, pretty much across the board and the releasability of their real estate is second to none. I do not like the mall reits (any of them) as malls are a dying breed, no matter how good the locations are, because they are running out of in-line tenants to lease for huge rents and net packages to. The shopping center (open-air) REITS, like Federal Realty Trust in particular, are well managed and have great real estate. So, in summary (in my view), if you were compelled to buy REITS, and it was my money, I would buy the likes of O and FRT. I would also add that, especially for young investors, I always recommend starting a core position with VOO or SPY and then branching out into a few solid, profitable, individual names from there.
> It's current assets minus current liabilities equal ~ 12% of it's market cap I would think most assets are IP, brands and stuff like that. Their value is highly debatable and can't be relied on the same as a REIT, a bank or some industrial company.
You don't need that sheet. Just use backtest. Does the same thing with a lot more control and you're not looking through some rando's spaghetti code. https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&mode=1&timePeriod=4&startYear=1972&firstMonth=1&endYear=2022&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=1000&annualOperation=1&annualAdjustment=1000&inflationAdjusted=true&annualPercentage=0.0&frequency=2&rebalanceType=0&absoluteDeviation=5.0&relativeDeviation=25.0&leverageType=1&leverageRatio=100&debtAmount=0&debtInterest=3.0&maintenanceMargin=25.0&leveragedBenchmark=false&benchmark=VFINX&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&asset1=REIT&allocation1\_1=75&asset2=LargeCapBlend&allocation2\_1=25
I never felt the need to buy a REIT ETF because you can diversify in the REIT sector with just a few holdings (apartments, industrial, retail, healthcare etc.). It really depends on how much you have to invest and whether you can diversify in the REIT space to give you a broader exposure. I own ADC, AVB, STAG, MPW and WPC. I may add MAA and CCI or AMT if the price gets right. I keep my REIT exposure to around 7-8% of the total portfolio and feel that is enough. It is a personal preference however so what works for me may not be suitable for your situation.
You can short a REIT that owns housing. And a housing market crash is probably about the worst case for rallying the kinds of traders influenced by WSB. You can’t rally folks losing their houses, except for maybe one last YOLO.
What about just bearish option spreads on VNQ or a more specifically vulnerable REIT? Companies holding low fixed rate mortgages since before the run-up and renting should be fine, but anyone buying a lot of inventory during the peak or with variable rate or leveraged financing — maybe Zillow?
I disagree with the others that you shouldn't invest in REITs or include dividends in your strategy when you're young, *especially* during a recession and *especially* if you're looking to create a steady stream of capital to reinvest. It shouldn't be a major part of your strategy, but it has its place in certain scenarios. That said, you should only consider it in an IRA. Like any ETF, you're trading potential yield and growth for stability and lower risk over individual REITs. FWIW, I like STAG for an individual with a 4.8% yield, because they skirt a lot of the residential/office volatility. Places like Amazon will always need warehouse space. If you want to get real fancy, there's also stuff like RLJ.PA which has a 7.8% yield, can't be called, and pays quarterly like clockwork, but its a hotel REIT, so don't bother if you're not holding *looooong*. That said, if you're more looking for a set it and forget it, diversified approach to REITs, an ETF isn't a bad way to go. That said, XLRE is very top-heavy and high risk with mortgage rates skyrocketing. I think it is over-priced at the moment (so is O imo).
Stick with your SP500 and VXUS. Maybe do 65/35 ratio or 60/40. Add some mid/small cap US if you want to or switch to VTI. These broad indexes already own some real estate. Any REIT will just over-expose you to the asset class and REITs yield high dividends so if you have to at least hold them in a tax-advantaged account like an IRA or 401K
Publicly traded REITs are property management professionals. It's one of the reasons you by stock in them rather than do it yourself because they have legal teams, finance teams and other professional staff that specialize in real estate laws, etc. Also, do you really think the office buildings across the street from the New York Stock Exchange is going to go vacant? Most REITs have fixed rate debt. https://www.reit.com/investing/reits-and-interest-rates Please find me an REIT where they have tons of these older office REITs that will all need to be renovated. I would think most that had them would have sold them off in the late 2000s or renovated them up to modern standards. If you find an REIT that meets all of these parameters I would be happy to short out except it sounds like it has been extremely mismanaged for several years anyway so it will likely have a ton of short interest and be expensive as fuck to hop on the short train. You guys keep pointing at all these problems and haven't even offered an example of this anywhere. I'd even take a private office property management company.
Inspired by another redditor, I have created snapshots of dividend stocks for a youtube channel. This time we have a quite known company that seems to be worth a deeper dive after recent downgrade! The metrics and threshold I look at is as follows: P/E < 20 Revenue growth over the last 5 years Profit margin > 10% Net income growth over the last 5 years Share buyback (yes or no) Dividend yield > 2% Pay out ratio <60% (unless REIT ofc) Dividend growth (depending on yield, but 5%+) Dividend growth history > 10 years Free cash flow growth over the last 5 years Long term liabilites coverable with 5 year of FCF Price to free cash flow < 15-20 depending on growth A quick fair value estimate based on FCF
Housing supplier here. If your housing project is multi family, IE Apartments, it’s also that the developer never planned on holding the project. Most of those communities are developed and then sold to a long term owner, like a big REIT or Real Estate Investor. The cost of those projects is at an all time high, due to land costs, material costs, and supply constraints like labor. And now the part normal people don’t get to see, with rising interest rates, the value of that project is plummeting. Valuations on cash flow producing real estate is inversely correlated w interest rates. For example if a 300 unit apartment building nets $10M per year, at the recent / historically low interest rates we’ve been seeing, the valuation would be $200M +/-. The 2% increase in rates this year would reduce the valuation to $150M +\- . That might sound like stupid money, but keep in mind you might be spending $150M out of pocket to get you there. Some projects just aren’t attractive enough to proceed w given the interest rate climate and it’s going to hurt housing supply.
Not necessarily. It depends on the industries. AAPL & MSFT will forever be growth stock as they will always spend money on R&D to invent new technology. O, on the other hand, is a REIT. It is required to pay out 90% of its income to investors.
REIT valuations also depend a lot on their cash flow from rents. As long as that is stable, so are their stock prices. It's when their tenants start to lose their jobs and can't pay rents, and they end up with voids, that when their stock prices take a beating. Also I imagine a good percent of reit tenants are Airbnb subletters who will get out of their leases ASAP if that demand drives out.
DRV is not a REIT. It is an ETF which aims to replicate 3x the **daily** return of the Real Estate Select Sector Index, an index of American real estate investment trusts. It achieves this, not by investing in real estate, but instead with derivatives like total return swaps. DRV is not based in anything. It’s meant for short term trading, due to the nature of its leverage, causing inaccuracies in the longer time, and the positive trending nature of markets. The fund, has exponentially lost money since 2008, the large price just showing the price before reverse splits. Please, I urge you to do more research on these complex exchange traded products/funds before you invest. If you have a short term bearish outlook in real estate, I urge you to further research the ETF. Look at its allocations, read the prospectus, and understand the risks of investing in leveraged funds. If you do not, or are not interested in this specific outlook, I would not touch this ETF. Please understand what you’re investing in.
Don't forget to factor in the dividend income you may be getting from the REIT. Are you collecting dividends? You know your situation better than me obviously, but I would consider riding it out and you can collect the dividends on a monthly basis while you do. It's just a thought. Good luck 👍
I mean not to be a dick, but the fact that you mention GFCI outlets as a huge hurdle is pretty ridiculous. This would probably add an extra couple thousand dollars (if that) to a renovation project considering you only need one per circuit and any idiot electrician can replace an outlet and this would be a days worth of work at most. I'm not sure how commercial works but as long as you are not adding, removing, or moving something it doesn't even require puking a permit to be done in residential. If you make the apartments big enough and divide them creatively enough you can manage to get all of them to have windows. I would think that at some point they would HAVE to renovate the building anyway just for the sheer fact that maintenance needs to be done at some point no matter what and that insurance premiums will be crazy if you don't have simple things like GFCI outlets or copper (vs aluminum) wiring throughout the building. Completely neglecting a building has it's own risks which if an REIT is doing then it is being mismanaged anyway. Also the fact that if the
Thanks for the help. Been investing for about 10 years now and haven’t ever sold from panic, i have a pretty strong buy/hold mentality so while large drop like in 2020 would suck, i would just ride it out. Thanks for pointing out that REITs were also included in VTI, should’ve looked more into that. I have about $15k cash in my TD account that I’ll use for the car next year, but wasn’t sure whether it would be best to keep it in cash, VTI, bonds, or REIT
Maybe if you bought a put when you bought the stock (called married put) you wouldn't be asking this question and could be making gains while collaring it. Now you are selling an asset that you fail to protect. You are missing out on lowering the cost basis to zero. Then resetting your infinite return on the REIT. This is what happens when you panic and just didn't buy insurance so now you're making yourself go in the hole even more! Good Luck!
VNQ is the REIT. VFIAX is S&P500 not a total market fund like VTSAX...but there's a super high percentage overlap. VOO is the ETF equivalent and I owned that for a while before migrating eventually to my current. The true broad passive indexing method wants you to have everything...but you're like 80% of the way there.