REITs: Time to buy?

Zacks recently suggested that it might be time to start looking at REITs. While cautioning that negatives remain – such as a lack of access to credit and rising delinquencies – the investment firm points out that most REITs are trading at a discount to net asset value (NAV) and sporting an average yield of over 9%.

They highlight two companies that they say are well capitalized and have access to adequate liquidity – Avalon Bay (AVB: 107.12 -1.15%, yld: 3.30%) and Vornado (VNO: 85.42 -0.55%, yld: 2.71%). That’s fine, but many investors (including me) are interested in REITs for their income, and have recently watched as many REITs cut or eliminated their dividends, or began paying them partly or wholly in shares – VNO being a case in point.

As a result – and also because I own a few REITs already – I’m staying mostly away from REIT common shares for the time being. REIT preferreds, on the other hand, are another story, and something I’ll likely be coming back to in an upcoming post.