If you plan to play the REITs game next year, here’s what you need to know.
“Bad News for REIT Investors” … “Negative Ratings Bias Rises as North American REITs Confront Effects of Covid-19” … “From Bad to Worse for REITs” … It’s not hard to find articles that talk about how unattractive the REITs sector is right now. However, some of the biggest winners during the covid-19 pandemic have been tied to the REIT sector.
The conventional wisdom is, as another REIT veteran back in the day once said: “Pay attention to what the talking heads are saying on TV and do the opposite – since that is what they are doing.” With that in mind, there are a few sectors that have performed well this year and on which TV’s talking heads are not focusing so much.
Having spent most of 2020 working from home, quite a bit of our time (as we must surely all admit) has gone on browsing the internet and shopping from sites such as Amazon and Walmart. Few people know that Amazon and Walmart alone lease millions of square feet from industrial REITs, such as Prologis, Inc. (PLD) and Duke Realty (DRE).
With so many online transactions occurring, the industrial REITs have gained significant tailwinds virtually overnight. A great way to play the industrial sector is through the Pacer Benchmark Industrial REIT ETF (INDS), which owns 14 of the largest industrial REITs on Wall Street. As some retailers have moved away from bricks-and-mortar stores towards website sales, industrial REITs will benefit from the demand generated by the pandemic through online shopping trends.