Egregiously cheap, but...., page-77

REITS in general were acting as a perfect bond proxy until covid.



What caused that disconnect in 2019 for shopping centre REITs? For CDP my guess is a combination of...
- The David Jones redevelopment that started in 2018, reduced free cash flow by a fair amount in FY19, FY20 and 1Q21,
- URW dragging down shopping centre REITS from mid 2018 and not recovering in 2019,
- Most recently, URW's capital raising speculation, noting URW's centres are in Europe and the US. France, Spain, UK, Italy etc covid numbers are all increasing again. US stabilising from its second wave, but its graph is still looking a bit sketchy. So probably fair enough that URW is getting crunched.
- The over reaction to online surge due to pandemic. People will soon tire of living in front of their laptops at home. So it would not surprise me if there is some opposite reaction (in the short term) when life returns to normal in Europe and the US. Although long term online trend will continue.

If the long end of the yield curve starts climbing, REITs will drift lower. So perhaps some more caution is warranted here.