Public data-center leasing companies such as Cipher Mining, Hut 8, Applied Digital, Core Scientific, IREN and MARA face their biggest threat from REITs. AI infrastructure is unbundling into financing and land, building and operating, and REITs like Realty Income use financing scale to accept a thin spread, already committing $1.9 billion to data centers. Rivals content with that spread erode the profitability of data-center leasing; vertically integrated businesses are the better bet. x.com 

Some AI data-center developers may have to absorb higher financing costs because existing leases have fixed economics and tenants need not pay more. That could reduce equity returns even as compute demand grows. Scarce deliverable power, strong counterparties and favorable financing could instead make the best developers more valuable as marginal projects stall. Vertically integrated infrastructure landowners such as Cipher look attractive; today's prices may be the worst of the selloff. x.com  … Show more

REITs stay in the penalty box because a reaccelerating labor market rules out Fed cuts this year. Job openings jumped to 7.618M against a 7.295M forecast and a prior 6.887M, and with core inflation still hot, Warsh can't cut into that. Rate-sensitive sectors such as REITs, small caps and anything long-duration stay under pressure, while shorter-duration, cash-flow-positive value keeps working. x.com  x.com 

Realty Income's 20%+ correction is among the most attractive long-term opportunities in the market, since such drops in a blue-chip dividend REIT typically do not last. The business keeps performing, with AFFO per share up 3.8% year over year and 136 monthly dividend increases since its NYSE listing. The stock sits about 10% below its 200-week moving average with a historically oversold daily RSI. x.com 

Starwood Property Trust's acquisition of Fundamental looks disastrous in retrospect, as Starwood pays out NAV while not earning its dividend. General pressure on rates and spreads adds to the damage after the stock was clobbered. The open question is when it becomes a buy, and whether it falls to Covid-era levels below $10 soon. x.com 

High Treasury yields keep US real-estate stocks from being a buy yet, despite a record low against the S&P 500. Each hike pushes the sector lower; the 10-year yield above 5% argues for waiting rather than assuming rotation is inevitable. A turn likely needs falling rates, perhaps a first cut or the 10-year back below 4%. x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com  x.com 

Digital Realty and Equinix face painful refinancing: the main credit they deserve over the past decade is for how much debt they piled up when rates were near zero, and rolling over their 2020–2021 issuance will not be pretty. x.com 

The US large-cap correction isn't over until interest rates top and bonds bottom, which hasn't happened yet. The summer 2023 S&P 500 correction ended right when bonds bottomed in October, with TLT trading massive upside volume, and there is no sign of that now. Higher rates keep pressuring real estate, where lots of money has been trapped since 2022, a possible source of downside dislocation, and an aggressive further rise in rates could bring a panic bottom. x.com  x.com  x.com  x.com  x.com  x.com 

Starwood Property Trust looks like a buy because most of its loans are floating rate and its servicing unit alone is immensely valuable and countercyclical. x.com  x.com 

Innovative Industrial Properties looks cheaper than the cannabis operators it leases to, with far more predictable revenue and a much stronger balance sheet, so being bullish on operators but bearish on the landlord makes little sense. The going-concern warning only reflects not holding the full cash for $291M of notes due this month at filing; redeeming them should be no problem. Leverage is below operators' and far below typical REITs'. Tenant defaults, such as PharmaCann's, are real. x.com