REIT industry expert and Chief Investment Officer of Hoya Capital and Hoya ETFs David Orbach was a guest on the latest episode of Nareit’s REIT Report podcast.
Auerbach said the REIT’s fundamentals remain “very strong” despite the Federal Reserve’s tight monetary policy. “If you look at the last quarter, public REITs reported same store property level earnings about 10% higher than before the pandemic. Many of these REITs have been preparing for the long winter, cleaning up their balance sheets, focusing less on variable rate debt.
He said investors want management teams to do four things – grow revenues, grow profits, raise guidance and grow dividends. “That’s pretty much what’s happening across the spectrum in the REIT industry.”
During the interview, Auerbach also said that:
- Hoya Capital focuses on dividend income growth and is tilting its coverage toward small- and mid-cap REITs. “We think there is a huge under-covered sector there.”
- The valuation gap between public and private real estate is still near the widest level. “Given the extended selloff through mid-2022, REITs are basically as cheap as they were last decade when looking at price on an FFO multiple basis.”
- Hoya favors single-family rentals, manufactured housing, and industrial areas due to constraints in supply growth.
- The Hoya Capital High Dividend Yield ETF is weighted more toward small- and mid-cap REITs, with a 10% allocation to REIT Preferred Shares as well as a focus on asset sectors with high dividend yields and low leverage.
- Hoya Capital Housing ETF is a diversified fund that focuses on sectors that support the housing industry, including residential REITs as well as home builders and service and technology companies. “We think this is a really unique way to take advantage of what’s going on in the residential market.”