Q: Is there any play here is some of these hammered REITs like Slate Office? It just cut the dividend, now trades for pennies. How risky is it to conclude that at some point it will restart a dividend as rates are being cut and office properties increase in value, and you would see the share price rise?
5i Research Answer:
In a scenario of lower rates and increasing property values, we do think the shares would do better. The other issue here, however, is the changing nature of office work where a larger number of employees can work from home or hybrid, which should continue to be a bit of an anchor on commercial real estate values. So, even if rates do come down, it might not mean that commercial REITs see a lock-step improvement in their values. There are probably easier opportunities in other (non-office) REITs that would benefit from lower rates but aren't battling headwinds in the form of office/work policies.