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 office space publicity for 3 years, and he has no plans to shift gears.
“If you have no rent growth and your vacancies are going up and you have giant operating expenses to run an office building, you’re going backwards fast,” the agency’s chief funding officer informed CNBC’s “Fast Money” on Tuesday.
Litt first warned Wall Street an “existential hurricane” was about to hit the sector in May 2020. Now, he is saying the “hurricane has landed.”
He’s doubling down on the decision — citing spiking rates of interest and excessive inflation. Litt calls them two components he did not anticipate when he first began shorting these corporations in May 2020.
DC-based JBG Smith Properties is considered one of Litt’s main shorts. It’s down 58% for the reason that World Health Organization declared Covid-19 as a pandemic on March 11, 2020. So far this 12 months, JBG Smith is off 20%.
“Washington, DC is one of the toughest markets in the country today,” famous Litt. “They have a substantial office portfolio.”
He provides the crackdown on lending is compounding the issues.
“This isn’t a work from home story anymore. This is a financing story. It’s kind of like them mall business went from the mall problem to the financing problem,” Litt stated. “Now, it’s a financing problem. And as these debts come due, there’s really nowhere to go because lenders aren’t lending to the space.”
JBG Smith didn’t instantly reply to a request for remark.