Fund Manager Says REITs Appear Undervalued

Matthew Werner, portfolio manager at Chilton Capital Management, joined REIT.com for a video interview at REITWorld 2016: NAREIT’s Annual Convention for All Things REIT at the JW Marriott Phoenix Desert Ridge.

Werner offered advice to generalist investors who are considering entering the REIT market.

“At the end of the day, the 'location, location, location' thesis is something that should not be ignored at all,” Werner stressed. “Being mindful of risk should always be a top-of-mind decision when looking at a company."

Werner also noted that REIT valuations look “cheap” based on almost every metric, despite robust fundamentals, “great” balance sheets and low dividend yields.

Turning to particular property sectors, Werner said office REITs on the West Coast and industrial REITs are enjoying tailwinds. Other sectors that can produce strong total returns include self-storage and lodging REITs, Werner said. Lodging REITs are “extremely cheap,” according to Werner.

“If they could go from extremely cheap to slightly cheap, investors could enjoy that ride,” he said.