We had done some work internally on the topic about six months ago, I'll see if I can find it and how much can be posted.In the meantime some interesting cross-disciplinary stuff via Barron's Income Investing, Jan. 22:
A Warning on Bay Area REITs
Technology analysts at Mizuho Securities USA took a look at venture capital funded tech startups and found them grossly overvalued in a Thursday report titled, “Bubble Jeopardy 2.0.”
So why should income investors be concerned? In part of the report, they took the novel approach of collaborating with their real estate counterparts. The result is a warning for investors in real estate investment trusts (REITs) in the Bay area.
Here’s how the reasoning goes: With venture investments at a peak, there are a lot of start-ups seeking office space. But as private capital becomes less abundant, those offices may end up empty. Apartment buildings, too, could struggle for tenants.
REIT stocks, of course, would turn negative long before any vacancies began to appear. Analysts write:
We think any meaningful indication that the private tech market is headed for a sustained downfall will impact tech-heavy REIT stocks in all property sectors, and in a negative way....MOREIf I recall correctly, both Kilroy and Hudson (symbols above) turned up in our work along with a couple others. More to come.