On August 23, 2016, the folks at Hoya Capital Real Estate provided data on the real estate investment trust (REIT) sector that we believe is bearing fruit.
In the table below, the apartment sector of REIT’s is covered. The data columns include AFFO/G, current AFFOx, and forward AFFOx ratios.
We took the current AFFOx column and looked at the performance of the REIT that had the highest and lowest ratios and ran a simple comparison of the REIT charts to determine the performance from August 23, 2016 to May 25, 2020. Our goal is to see if, on a spectrum of highest to lowest AFFO ratios, which had performed better.
In this case, it was Apartment Investment and Management Co. (AIX) with the highest current AFFO ratio and Mid-America Apartment Communities Inc. (MAA) with the lowest AFFO ratio. Below is the performance of the two REITs from August 23, 2016 to May 25, 2020.
This is a single grab of data between only the highest and lowest current AFFO ratios within a narrowly defined subset of the REIT industry. However, the results, especially after the recent crash in the REIT market, are fascinating.
We think that the continued emphasis on the hard data by Hoya Capital will prove instrumental in understanding the complexities of the REIT sector. Furthermore, as the data grows with the passage of time, we expect that, in the realm of REIT investing, Hoya Capital is on the right path and we recommend reviewing their work for anyone serious about buying REITs.
