Artis Real Estate Investment Pref Shs Series E T.AX.PR.E

Math.

[garyreins]

Simple scenario for a REIT.

If you have a building worth $1m, $500k levered, $500k equity.

500k debt rolls at 2% higher (higher  rates) thats 10k/year more you are paying x 10 years = 100k.

If inflation is 2% for 10 years its 20% increase in asset price = 1.2m.  

But "cumulative" inflation past 3 years was like 20%....so its way higher

REITS should have gone up through the roof as the underlying asset price (replacement costs +  + leasing spreads  that match inflation rates) and cancelled interest expense, because the physical asset is worth more due to debasement.

What a sham this is.

Unbelievable

[Torontojay]

When you measure reits in inflation adjusted terms then its performance has been abysmal. Leverage is great in good times and horrible in bad times. 

[garyreins]

Abysmal is a correct term.

[REITman]

That's actually a pretty good summary of the case for owning REITs, Gary.  We have a lot of catching up to do.  First, office assets should slowly grow a bit closer to an ever-growing replacement value as the overbuilt stock is slowly leased up, torn down, converted, etc.  Second, the REIT discounts to NAV should close as stock market investors regain an appetite for commercial