A serious activist investor is betting stalled return-to-office plans will fire up extra bother in industrial actual property.
Land and Buildings’ Jonathan Litt has been shorting REITs with excessive workplace area publicity for 3 years, and he has no plans to shift gears.
“You probably have no lease development and your vacancies are going up and you’ve got big working bills to run an workplace constructing, you are going backwards quick,” the agency’s chief funding officer informed CNBC’s “Quick Cash” on Tuesday.
Litt first warned Wall Avenue an “existential hurricane” was about to hit the sector in Might 2020. Now, he is saying the “hurricane has landed.”
He is doubling down on the decision — citing spiking rates of interest and excessive inflation. Litt calls them two elements he did not anticipate when he first began shorting these corporations in Might 2020.
DC-based JBG Smith Properties is one among Litt’s main shorts. It is down 58% because the World Well being Group declared Covid-19 as a pandemic on March 11, 2020. To date this yr, JBG Smith is off 20%.
“Washington, DC is among the hardest markets within the nation right now,” famous Litt. “They’ve a considerable workplace portfolio.”
He provides the crackdown on lending is compounding the issues.
“This is not a work at home story anymore. This can be a financing story. It is sort of like them mall enterprise went from the mall drawback to the financing drawback,” Litt mentioned. “Now, it is a financing drawback. And as these money owed come due, there’s actually nowhere to go as a result of lenders aren’t lending to the area.”
JBG Smith didn’t instantly reply to a request for remark.
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