U.S. REIT Shares ‘Cheap’ as Stock Slump Creates Discount Buying
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U.S. real estate investment trusts are trading at the biggest discount to the underlying value of their properties in more than two years, signaling it may be a good time for investors to buy shares in the companies.
REITs traded at about a 12 percent discount to net asset value as of Oct. 5, the largest since early 2009, according to Jim Sullivan, a managing director at Green Street Advisors in Newport Beach, California. Net asset value is an estimate of the fair market price of the real estate owned, minus liabilities. When the discount reaches at least 10 percent, REITs generally offer better returns over a two-year period than a portfolio of equal parts equities and corporate bonds, he said.