Name: Bill Chen on the current set up for REITs
Uploaded: 2026-02-03T13:58:17+00:00
Duration: 3034 s

Speakers

Bill Chen — Co-founder, Sina Finance

Andrew Walker — Host, Yet Another Value Blog

Summary

Andrew Walker and Bill Chen discuss why REITs have lagged despite a strong economy, focusing on the 2021 capital cycle and the supply wave that hit multifamily, self-storage, and warehouses. Bill argues that supply is rolling off, starting cap rates and rent growth can support 10%+ total returns, and he is more excited today. They also discuss REIT governance and buybacks, PE takeouts, and a unique wave of REIT liquidations where Bill is running higher gross leverage. Bill highlights multifamily, self-storage, life science/cold storage dislocation, and event-driven liquidation opportunities.

REITs underperformed because the 2021 low-rate boom triggered a broad supply wave across real estate.
Bill sees supply rolling off and starting yields plus rent growth supporting attractive long-term returns.
Multifamily and self-storage are highlighted; life science and cold storage are most dislocated.
Governance and buybacks are debated, with Bill arguing buybacks are not the only path to value.
Private equity takeouts are creating 25-40% premiums and a target-rich REIT environment.
A rare wave of REIT liquidations offers fast event-driven returns; Bill runs 110-130% gross exposure.
Andrew and Bill discuss liquidation execution risks, asset quality, and management incentives.

Ideas

Bill Chen Co-founder, Sina Finance 5:05

Multifamily REITs offer 10-11% returns.

Multifamily REITs trade at roughly mid-6% cap rates; after 80-90 bp of G&A and $1,000/door maintenance capex, true cash yield is about 5.1-5.2%. Adding 2-3% rent growth and modest leverage can produce mid-10s to 11% total returns, and despite the most deliveries in roughly 40 years, NOI only fell about 3%, showing resilience as supply falls below 20-year averages.

Bill Chen Co-founder, Sina Finance 7:39

Low-leverage REITs offer 10% total returns.

Bill argues REITs have underperformed because the 2021 low-rate boom caused a broad supply wave in multifamily, self-storage, and warehouses, but that supply is now rolling off and capital is not being redeployed outside data centers. Starting cap rates around 6-7%, 2-3% rent growth, and conservative public-REIT leverage can generate about 10%+ total returns, and he is more excited today because multiples have not yet expanded.

Bill Chen Co-founder, Sina Finance 17:00

Third-tier office remains very tough.

Outside stabilized apartment buildings, third-tier office properties in third-tier cities are very tough right now, making that part of office unattractive.

Bill Chen Co-founder, Sina Finance 31:50

Public REITs are easy PE targets.

Private equity's bar to make money buying public REITs is very low, so public shareholders can receive 25-40% takeout bumps. With takeouts such as ROIC, Alexander & Baldwin, and Dream Residential, Bill views the environment as target-rich and would rather recycle capital into other opportunities than fight completed deals.

Bill Chen Co-founder, Sina Finance 33:37

Life science, cold storage most dislocated.

Life science and cold storage are the most dislocated REIT areas without adjusting for leverage. Blue-chip names Lineage, Americold, and Alexandria are trading at high implied cap rates and low EV multiples, creating an opportunity regardless of the companies' inherent leverage.

Bill Chen Co-founder, Sina Finance 34:35

Self-storage REITs are dislocated and loved.

Self-storage is very dislocated: the group sold off together after Q3 earnings and then found a bid early this year as investors expect the supply/demand dynamic to inflect. Bill says they love their self-storage exposure right now.

Bill Chen Co-founder, Sina Finance 35:04

REIT liquidations offer fast dislocated returns.

There is a unique wave of REIT liquidations that Bill sees as very dislocated on a risk-adjusted basis. He buys liquidating REITs around $10, expects about half the cash back within one to five months from asset sales/balance-sheet cash, and underwrites at least 20% upside. Because cash returns quickly, he has raised gross exposure to 110-130% for the first time.

Andrew Walker Host, Yet Another Value Blog 39:04

Net lease office liquidation has under-monetization risk.

In the net lease office liquidation, better assets with easier-to-underwrite leases sell first, leaving lower-quality office assets with short lease terms. Andrew holds a position and worries management, with little ownership/incentive, may accept the first reasonable bid instead of maximizing value; Bill adds that hidden liabilities or tenant clauses can explain seemingly low bids, so price can compensate for the risk.

Andrew Walker Host, Yet Another Value Blog 47:27

Small-cap REITs face crippling public costs.

Subscale small-cap REITs, such as a $700 million market-cap REIT with $1 billion enterprise value, spend roughly $20 million a year as public companies and cannot outrun that drag to create value. Andrew thinks that makes them structurally challenged and likely liquidation or takeout candidates.

Bill Chen on the current set up for REITs

Summary

Ideas

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