REITs Enjoying Attractive Dividend Yields, Record-Low Leverage

Michael Torres, CEO of Adelante Capital Management, and Jeung Hyun, portfolio manager, joined the latest edition of the Nareit REIT Report podcast.Torres and Hyun discussed a number of topics, including: REIT fundamentals; discounts to net asset value (NAV); merger and acquisition (M&A) activity; the role of active portfolio management; and the potential for increased Asian investment in real estate.Torres noted that the REIT industry is entering 2019 with attractive dividend yields and record-low leverage. On the other hand, private market participants have a lower cost of capital and the ability to outbid their public market counterparts.Hyun said he expects some property types will trade at discounts to NAV for the foreseeable future. As for M&A activity, public to public deals are not as likely because “investors aren’t making enough of a distinction between companies and management teams to whom they want to grant the cost of capital advantage.”