Scott Crow, United States, America discussed on Bloomberg Markets
Now Scott make the case for real estate investment trusts in an era where, you have historically low interest rates but that seems to be ending, at least it is ending slowly let's seems to. Be what everyone's worried about but I think, we should, back up and see what the markets the challenge that the. Market is giving investors today and if you just look at the. Numbers the data the fangs stocks are the whole of valued at fifty percent the value. Of the, underlying, commercial. Real estate value in the US and that's that's an investment challenged that investors either has, to accept or go the other But we would say that if you had the choice of owning the five, most popular tech stocks in America or half the value of all, the commercial real estate across the country even the. Millennial in our office over the long term, would take, the real estate and to put that in context if he. Got back ten years ago the largest company was Excellent Can you. This whole, that it was GE so it's not that staying stocks on exciting interesting Craig Greg. Greg, product it's just a question of. Valuation and to the extent that everyone's been so worried about. Easy money getting into real estate stocks I think potentially the market. Is missing is a, lot of that easy money has gotten into tech stocks you look FANG trading fifty four times you bitcoin and you look a lot of the startups that are out there the frankly. Don't have a lot of revenue prophets and we think that's where the bigger risk is today Scott I am worried, about trade tensions it keeps me awake, at night and I grind. My molars but you're saying? That trade tensions, can be good for real estate please ease. My. Pain Doc running, him all I think it's going to be just fine I think that trade really represents an existential risk to putting the US. Into recession that being said there is a silver lining for real estate real estate is a domestic asset. So the more domestic, production, there is, at home, the Motoman for real estate assets betting most importantly it continues to. To continue the patent of a very gradual fed, it's another risk to worry about and that's another reason. Why, we think that race talks actually. Continue to outperform even though interest rates are rising interest rates. Arising actually pretty slowly so following the correction we had at the. Start of this year Three stocks are actually doing quite well Well Scott maybe you could help us understand how do you actually. Select the, best reach, to invest in just looking for example at the I shares core US. Re just using that as an example it has increased, about two percent so far this year but you've had two stomach a decline of more than twelve, and a half percent going into February and then that's slow climb from. February for a nearly fifteen percent gain so how do you determine? The read that you want to own how do you find out what the? Best, way to get, that income is well first of all with the market freaked, out about interest rates earlier this. Year it's a great time to invest the reality is that the real estate market and read market never priced into two percent. Ten year bond yield being there forever there's a big big. Cushion? Between dividend yields and underlying interest right so when you say the market freak out of interest rates, with a great time to get, in in addition within the right market. There's lots of exciting things going on many of them driven by some of the changes to the Economy and demographics that surround us how do we get that. Little Brown books from Amazon onto our door the answer is. Through? A complete reconfiguration of America's supply chain that's being done by rates they're the ones that are creating, the logistic assets that allow that, to happen data centers Celtel creative office. I mean these are all significant parts of the universe the Benefitting tremendously. From a lotta these trends that are happening in the underlying economy that three. Benefit from, technology the difference. Is the, rate market trades to sixteen times thanks fifty. Four Scott we only have a little bit of time left? But I wanted opinion down on the type of read that you would recommend above all others is it an office read is it any kind of read that you just. Mentioned tell us what is the one kind of read. That, you, favor Well look I take a few from the different. Sectors I mentioned data centers equinox is a great, company to one on the on the office side company like Kilroy very very exciting things in. Terms of a creative office? Logic like global logistics provider building out a cloth supply? Chain that, all of them is on the three PL us to To make e-commerce a. Real thing and you know Celtel, is like an t the wireless pot of, of of, the digital economy the physical manifestation if you will all the digital economy and the the great. Places to be that I get the same little attention fanfare that the tech stocks do price much more attractive and. They based on. Sold assets to cash flow we got to leave it there but we want to thank you very much. Scott crow chief investment, strategist center square. Investment management talking about Kilroy? Prolonged GIS equa, Knicks and. American.