How do you go about valuing REITs?

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You can’t value these companies off balance sheet items, especially in real estate bc values aren’t marked to market. One simple way is to take Net Operating Income and divide by a cap rate you feel is appropriate. That will give you the enterprise value, then subtract out the debt and that’s the value of the equity.


The value of a REIT would, like a stock, be theoretically based on what the market thinks its earnings will be. Most earn money by leasing property and would likely specialize in something like shopping malls, etc. I like my REIT fund for diversification because it sometimes moves differently than stocks in a down market yet performs better than bonds are doing these days.


Crown castle owns and rents out cell tower sites, they are not really as exposed to real estate as they are telecom.


Don’t short a market where you have no experience valuing the companies. Theoretically, you have an infinite downside potential. Also, valuing real estate isn’t that simple. There are a variety of risk factors that should be evaluated for any real estate investment, but there are also different sectors within real estate, including commercial, industrial, single-family, multi-family, etc. Each sector involves unique risk factors that must be analyzed. I suggest getting a couple of textbooks on real estate investment, just to get a sense of how a real estate business operates. REITS are almost always highly levered. They also have tax advantages. These are just two of many factors that make them different from some other asset classes. You can’t just look at market cap or book value or equity to value a company. You really have to understand how that particular business operates and how that translates into those and other metrics in the financial statements.


Look up Funds From Operations (FFO). Traditional stock and ETF valuation metrics aren’t applicable to REITs. Also, you’ve been investing for a year and you want to short RE? You missed your chance in 2020.