Buy The REIT - Sell The Real Estate
THEPALMER
Cognitive dissonance has hit the real estate market as people simultaneously love real estate and hate REITs. Physical real estate properties are presently selling for all-time highs while the REITs that own them are selling at fear mongering, recession level multiples. We discussed the cheapness of share prices more thoroughly here, but today I want to discuss the expensiveness of the physical real estate.
When these two facts are put together it creates a rather odd opportunity in which one can buy a REIT at 70 cents on the dollar and then sell its assets at full price.
Allow me to begin by taking a look at a variety of actual real estate transactions.
Real world transactions
The office market has been written off as dead, but big money has come in and paid quite a price tag in the recent SL Green (SLG) Office sale.
“New York City’s