Activist Real Estate Investor Says It’s ‘Game On’ For REITs, Which Real Estate Stocks Are On His Radar?

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Jonathan Litt, the founder of investment management firm Land & Buildings, has been famously focused on office real estate, but he may be starting to change his tune. This could be welcome news for investors who follow his predictions and wonder when things might look better for the REIT sector.

Litt has been shorting REITs with heavy exposure to office space for several years. In 2020, he said what he called an “existential hurricane” would hit the offices in 2020. Last year, he told CNBC that “the hurricane has landed.”

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Litt recently joined CNBC’s “Fast Money” to talk about the state of commercial real estate. Litt spoke briefly about the residential housing market, noting that the Federal Reserve’s decision to cut interest rates may change what happened in the housing market.

Litt noted that homebuilders traded at very high levels. New home sales are up nearly 10% annually, while existing home sales are down more than 4% from last year. However, an increase in existing home sales “could be a challenge for homebuilders,” Litt said.

CNBC’s Melissa Lee asked if Litt’s stance on homebuilders was short-sighted, but Litt declined to take the bait, saying only that he was monitoring the situation.

It’s “Game On” for commercial real estate

Litt has seen a palpable change in the commercial real estate sector. He said private and public companies are getting excellent funding and accelerating deal volume. Some real estate brokers, such as CBRE (NYSE:CBRE), could be big winners, benefiting from the high transaction rate after several years of a depressed market.

Litt also likes Equinix (NASDAQ:EQIX), one of the leading data center REITs. He was recently at the Bank of America conference, where the company said the REIT ETF had twice the demand of any other ETF in its system.

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Like many others who watch the market, Litt noted that banks have been slow to lend in commercial real estate, and that trend is likely to continue. He noted that public companies have an advantage when raising funds.

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Is The Office coming back? Not quite yet

Litt was asked about Amazon’s recent decision to end remote work. He said he doesn’t see a massive return to work yet, especially in New York, where leasing is tight. He said that even if people are returning to the office, the problem is on the funding side. “You can’t get loans, assets don’t offset, and there’s going to be a lot more pain in the New York market,” he added.

One of Litt’s short trades is Alexandria Real Estate Equities (NYSE:ARE), which has outperformed other REITs. He said the data hasn’t changed and noted that the company has had several downgrades. Benzinga data shows there have been five analyst downgrades since late July after Alexandria Real Estate posted earnings. He believes the trend and the slowdown in demand for lab space won’t reverse anytime soon.

After his appearance on CNBC, Litt also posted on X, reiterating the message that the game is wide open for REITs. While it’s clear he likes some REITs more than others, his optimism is still a positive sign for real estate.

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This article An activist real estate investor says it’s ‘Game On’ for REITs, which real estate stocks are on his radar? originally appeared on Benzinga.com