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With about $80M, Chapel Hill real estate investor eyes out-of-state opportunities

June 29, 2019

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How the UK's exit benefits US REITs

Obviously quite a bit happening now with the Brexit results and the ensuing drop in yields.  It is very difficult to see this as anything other than bullish for REITs and basically any sound, income producing commercial real estate.


This is an article that has been one of dozens out post- Brexit from CNBC.  While it is focusing on publicly-traded REITs, all of the analysis in here applies to our deals:


They are considered safe, and they offer yield. No wonder the stocks of real estate investment trusts ran in the opposite direction of the Brexit-bashed U.S. stock market Friday.


Last fall, interest in REITs had begun to wane, as expectations of higher interest rates outweighed solid fundamentals in the real estate market. Now REITs, and the real estate underlying them, are the power play for the anxious investor.


"Anything that is going to drive the 10 year lower is a positive for REITs. Three-and-a-half percent dividend yield with 6 to 7 percent earnings growth is pretty darned attractive in this environment," said Alexander Goldfarb, senior REIT analyst at Sandler O'Neill.


REITs will also benefit from rising commercial real estate values, as foreign investors continue to pour money into the U.S. office, retail and even apartment space. They had been doing that already, but Brexit will only accelerate the pace, especially of Chinese and Middle Eastern money entering the U.S. brick-and-mortar markets.


At Prudent Growth, we will continue to work hard to find deals that meet our criteria:  higher than average cap-rates, well positioned assets with some upside potential from value-add improvements and/or better management!


Full article here:

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