- We're not willing to buy into the fear mongering about the economy, unemployment, work-from-home trends, and similar short-term negative effects.
- AvalonBay’s 18.5x p/AFFO multiple is the lowest valuation it has traded at during the last 15 years or so.
- Because of the current headwinds in the multi-family space, we’re sticking with our high-quality mantra and focusing on names like AVB.
- This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »
This article was coproduced with Nicholas Ward.
About six weeks ago, we published an article titled "Avoid the 3 T's: Essex Realty vs. Avalon Bay." As implied, it compared two of the premiere multi-family REITs, Essex Property Trust (ESS) and AvalonBay Communities (AVB).
Both are blue chips with long histories of generating significant wealth for their shareholders.
Since their IPO dates, ESS has generated annualized total returns of roughly 17% and AVB has generated roughly 13.3%.
When you're compounding wealth at double-digit clips like that over such long periods of time, the exponential growth begins to snowball into something incredibly powerful.
We’re the first to acknowledge that COVID-19 has put a damper on the sentiment surrounding these apartment names. But we're not simply buying into the fear mongering surrounding the economy, unemployment, work-from-home trends, and other short-term negative effects.
These companies’ management teams have proven their ability to survive – and even thrive – throughout tough economic environments in the past. And we believe they’ll continue to do so into the future.
