In general, we love REITs. It is a very convenient way of owning real estate without the hassle of dealing with tenants. However, not all of them are the same. Here you have an old list of high dividend REITs.
With the rise of on-line shopping, we tried to avoid mall REITs. We felt many malls were built and only a few became successful. Besides malls, the Covid era has accentuated another global trend: working from home. This new reality we feel is likely to linger on.
When the pandemic wanes, do you think employees are going to return to the office?
Some financial firms are requesting their workers to return to the office as soon as possible. However, others such as Twitter, Spotity, Square... are going to let telework forever. We still don’t have enough data to value the effectiveness of the employees doing their job from home. We don’t even know if the intermediate managers are well prepared to assign specific tasks with adequate duration estimates. Probably, all of us have an opinion on the matter based on our own experiences.
That been said, the most probable outcome is going to be a hybrid model. Many big corporations (Microsoft, Maersk, etc...) have publicly announced they are willing to let employees combine work at home and at the office. There are even some office models with distributed workstations all over the cities.
In any case, office space is going to suffer the consequences of more people zooming. There are REITs that only invest in offices. We never liked them. However most of the big REITs invest a big part of their capital in offices. It is up to you to decide if it is worth it.
Remember: before buying a REIT check the portfolio they own to have a clear idea of what you are buying.
Paul Krugman recently wrote an article in The New York Times basically advocating for high levels of National debt: Learn to Stop Worrying and Love Debt. Besides the political bias, his point was governments have managed adequately high levels of debt and “nothing” bad has happened.
The Covid crisis is going to be solved creating money and giving it away. Honestly, we are just a humble group of thinkers and don’t have all the answers. However, when we are in doubt we choose two approaches:
1. Follow the big movements. For instance, in investments, before choosing a company, we choose the sector and the country. At the end, even without considering all factors, if the sector has a solid future, geographically the area is doing better than the rest and the price you pay is decent, the investment tends to be successful.
2. Follow common earthy laws. When we see that I receive money for asking a loan, or that I have to pay interest for giving a loan, we feel something is crooked and will not end happily.
When governments can create as much money as they need with no limitation and inflation is under control, and people still trust the currency, we feel we are buying time, but something is wrong.
It is true that the time we buy can be enough. First, the worst currencies won’t be able to survive and suffer tremendously. We are seeing it today, for instance with the Turkish lira or the South African rand. But eventually the good ones will start feeling the pain as well. It is funny that the moment in history in which “size matters”, some countries are trying to go in the other direction (Brexit, independence movements in Spain...).
Highlanders moment?
