Jun 10, 2024

Cory Diary : Turnaround of Reits

With the current high rate and coming Fed meeting announcement soon when will it be a good time for Reits turnaround in stock price ? Looking at the Rate (below chart ) which max spike in Aug 2023 and probably well felt by end of 2022, when will rental reversion be able to catch up assuming no more rate increase ?

If we are to take Mall Reit example assuming 3 years cycle of contract, full update maybe Aug of 2026. There are variables on reit types, management ability and probably loan cost which varied with their own renew or expiry. There is no definite answer we can know unless we are insiders.

To be safe, I would think early next year 2025 will be a good timeframe to review Reits allocation increase. Anything before will need good conviction, sizing and unique Reits performance.

Will rate cut helps ? Maybe shorten the wait accordingly. This could be a slow process of unwinding. So may not help much near term.

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