Homepage
PR Newswire
26-12-2023, 02:47 PM
hi CY09,
My position of strength is coming POV of a REIT shareholder. Regardless of cap rates, if the REIT is able to divest assets at/above market valuation, that sends a signal to the market, especially strong if the REIT itself is trading at much higher discount to historical levels. Such signals may close valuation gaps and provide more confidence to all stakeholders. For leveraged entities, confidence is probably key above anything else.
As for divesting during low cap rates, we can't forget that divestment means AUM reduction (and fee reduction) for the REIT manager. So whether independent or not, no REIT manager wants to manage an asset based getting smaller on an on-going basis. Putting ourselves into their shoes, do you want your salary to get lower over time?
My position of strength is coming POV of a REIT shareholder. Regardless of cap rates, if the REIT is able to divest assets at/above market valuation, that sends a signal to the market, especially strong if the REIT itself is trading at much higher discount to historical levels. Such signals may close valuation gaps and provide more confidence to all stakeholders. For leveraged entities, confidence is probably key above anything else.
As for divesting during low cap rates, we can't forget that divestment means AUM reduction (and fee reduction) for the REIT manager. So whether independent or not, no REIT manager wants to manage an asset based getting smaller on an on-going basis. Putting ourselves into their shoes, do you want your salary to get lower over time?