EP #162 | Navigating the World of REITs with Brad Thomas, aka mr REIT
Sep 2, 2023
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Brad Thomas, the most widely followed author on Seeking Alpha and author of 'REITs for Dummies,' talks about valuable advice for beginners in the field, identifying red flags in companies, and current industry trends.
Different sectors within REITs may respond differently to higher interest rates, so thorough research and understanding the market dynamics for each sector is crucial.
REITs with resilient fundamentals, diversified portfolios, and a focus on efficient capital allocation may fare better in a higher interest rate environment.
Gaining practical knowledge, building connections, and learning from professionals are essential steps for beginners in the real estate industry.
Deep dives
The Growth and Evolution of REITs
REITs have experienced significant growth and evolution over the years, starting from their formation in the 1960s. They have become a massive sector, with nearly $2 trillion in assets today. REITs have been battle-tested, surviving through multiple recessions and the recent pandemic, which has strengthened their credibility as long-term investments.
Analyzing REITs Across Different Sectors
When considering REITs as lifetime investments, it is essential to analyze specific sectors individually. Different sectors, such as net lease, technology, and warehouse REITs, have demonstrated strong fundamentals and potential for long-term growth. On the other hand, sectors like office REITs may face structural challenges and may not return to pre-pandemic norms. Conducting thorough research and understanding the market dynamics for each sector is crucial.
REITs and the Impact of Interest Rates
The recent rise in interest rates and the Federal Reserve's efforts to combat inflation have raised concerns about the impact on REITs. While higher interest rates can affect the cost of capital for REITs, it is important to note that the real estate market is diverse, and different sectors within REITs may respond differently. REITs that have resilient fundamentals, diversified portfolios, and a focus on efficient capital allocation may fare better in a higher interest rate environment.
Focus on Real Estate Experience
The speaker highlights their extensive experience in the real estate industry, which sets them apart from other writers. They have gained practical knowledge by working with a business partner who owns various types of properties, such as golf courses and shopping centers. This hands-on experience taught them how to create value, negotiate lease contracts, and manage properties from the ground up. Additionally, they emphasize the valuable relationships they have developed with CEOs, providing them with insights and expertise from successful industry leaders.
Tips for Getting Started in Real Estate
When asked for advice on how to get started in real estate, the speaker suggests taking real estate classes and attending conferences to gain knowledge and build connections. They also recommend reading financial statements, analyzing earnings calls, and using platforms like Seeking Alpha to learn from professionals and mentors. The speaker shares their plans to launch a high-yield ETF focused on safe mortgage REITs, preferreds, bonds, midstream MLPs, and BDCs. They caution investors against chasing high yields and stress the importance of diversification and building a strong circle of confidence in real estate investments.
In this episode, we are delighted to welcome "Mr. REIT" Brad Thomas, the most widely followed author on Seeking Alpha and the author of the upcoming book "REITs for Dummies," which is available for pre-order at this link: https://www.amazon.com/REITs-Dummies-Business-Personal-Finance/dp/1394185359
Our discussion kicks off with a review of the week's top news, with a particular focus on Realty Income's investment in Bellagio. Brad provides his insights on why this could prove to be a lucrative deal for the monthly dividend company.
Following the news segment and a lively round of rapid-fire questions, we delve into various topics, including:
Brad's journey into the world of real estate.
Evolution in Brad's investment approach.
Valuable advice for beginners in the field.
Identifying red flags in companies.
Brad's perspective on current industry trends, sectors to favor, and sectors to approach with caution.
We hope you enjoy the show as much as we did.
Do you want to learn more about Brad?
Follow him on SeekingAlpha: https://seekingalpha.com/author/brad-thomas
Follow him on Twitter: https://twitter.com/rbradthomas
Buy his book The Intelligent REIT Investor: https://www.amazon.com/Intelligent-REIT-Investor-Guide-Investment/dp/111975030X
Pre-order his book, REITs for Dummies:
https://www.amazon.com/REITs-Dummies-Business-Personal-Finance/dp/1394185359