Market Commentary | June 16, 2026

Portfolio Shuffle

For more than 3 years, we have forecast that shopping center REITs are poised for outperformance. Well, like the broken clock that’s always right twice a day, this year our prognostication came true and stuck.

After six consecutive quarters of strong leasing and rent roll-ups, the whole shopping center sector FFO multiple has expanded from about 12x to 16x. It started with Whitestone REIT, which, after numerous offers, finally accepted a cash offer to be taken private. At the end of May, Slate Grocery REIT disclosed that its manager was contemplating a buyout offer, and there is ongoing speculation about the next acquisition target.

Retail real estate is outperforming the broader REIT sector, and that’s our signal to move on to other pursuits.

What to Buy?

Earlier this week, Dane Bowler bemoaned that all he was seeing to buy was Industrial and a selection of mREIT preferreds. The “Industrial” to which he was referring is One Liberty Properties (OLP), a company we first traded heavily 25 years ago when it was a net-lease, diversified REIT. OLP’s share price sits about where it did a decade ago, but earnings seem poised to climb. More importantly, its portfolio is now more than 84% comprised of industrial/logistics properties.  The average industrial REIT trades at 17x AFFO, and investors can currently purchase One Liberty at 80% of NAV and just 12.3x AFFO. If the pricing multiple starts to resemble that of the industrial sector, shareholders are in for some meaningful capital appreciation.

We remain ever alert for discounts and mispricing. Your continued participation is greatly appreciated.

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