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Lusandra Neo

18 Apr 2019

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Does the net net value investing strategy apply to REITs?

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The net net value investing strategy values a company based on its net current assets. However REITs generally lack current assets and current liability figures for evaluation. Since REITs are inherently equity based instruments they come with the same risks that come with buying stocks however, business equity has historically been a better perfomring investment vehicle than real estate. I would think the value investing strategy applies to REITs but not the net net value investing strategy. The value investing strategy requires diligence and patience and emphasizes the importance of a margin of safety. These factors can be found in REITs where long term returns are gained from reinvesting dividends earned back into the market and utilising the power of compounding. Value investors can also protect against loss of principal by selecting a significant margin of safety, indicated by a safe yield, suggesting potential for dividend growth.

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