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