Key Takeaways: Ahead of our residential REIT Best Idea presentation next week on 5/20 at 2PM ET, we are re-arranging names on the Long / Short Bias lists of our Position Monitor. Specifically, we are adding single-family rental (SFR) REITs AMH & INVH and Coastal Gateway apartment operators AVB & EQR to the Long Bias side, while adding ESS to the Short Bias side (see ESS RTA sell signal triggered on 5/7 HERE). Active Best Ideas PSA and EXR remain unchanged.
There are three key themes guiding our thinking in the space right now: (1) the potential for the market to be meaningfully underestimating an acceleration in earnings growth in SFR, weighed against the potential for a crowded trade, (2) Coastal Gateway apartments being the way to play the return to office in the fall, and finally and perhaps most importantly (3) our varying degrees of confidence in the numbers. As we will discuss next week, the GIP Quad framework will also come into play with some candidly surprising results / implications that investors need to consider as we sit in Quad 2 and think ahead to Quad 4 later this year. More to come next week.
Figure 1: Position Monitor
