Recently, insiders bought a lot of shares in three real estate investment trusts. These stocks were in a sector that missed the recent market rise.
The Vanguard Real Estate ETF, which is worth $60 billion, has only gained 2% since the end of 2022. In that time, the S&P 500 average has gone up 41%. It looks like commercial real estate has been hit from all sides. Prices are going down because of high interest rates, but there is still not much desire for office space. The possibility that the Fed might not cut rates quickly hangs over REITs.
In an April Wall Street Journal story, Rick Kahler, founder of the Kahler Financial Group in Rapid City, S.D., said, “People are afraid of real estate.” “There’s bad news.”
However, recently, people in charge of three REITs—National Storage Affiliates Trust, Douglas Emmett, and AFC Gamma—have bought a lot of shares.
The Vanguard Real Estate ETF has stocks in both National Storage, a company based in Greenwood Village, Colo. that specializes in self-storage properties, and Douglas Emmett, a company based in Santa Monica, Calif. that owns office and multifamily properties in Los Angeles and Honolulu. With market values of $4.7 billion and $2.7 billion, the two REITs are much bigger than the $250 million AFC Gamma, a lender in West Palm Beach, Florida, that works with legal weed businesses.
NatStock has dropped 1.5% so far this year, which is a little less than the 4% drop in the Vanguard ETF. There is 14% more in the S&P 500.
Chad Meisinger, a shareholder at National Storage, paid $694,600 for 18,405 shares on June 7. Each share was worth an average of $37.74. With a self-directed, simplified employee plan individual retirement account, he was able to buy the shares. A form that Meisinger sent to the Securities and Exchange Commission shows that he now owns 114,155 shares.
“The company is likely to realize substantial earnings accretion over time following the recent [participating regional operating] internalization announcement,” Meisinger wrote in an email to Barron’s. “While the stock continues to trade at a discount to peers.” “The self-storage industry is getting close to a fundamental bottom. I have faith in the company and the industry’s long-term success, so now is a great time to buy more NSA shares.”
Meisinger has been a trustee since 2015, and the last time he bought National Storage stock was in December 2022, when he paid $2.2 million for 55,000 shares, which is about $39.11 each.
Stock in Douglas Emmett has dropped 8.3% so far this year.
A member of Douglas Emmett, William E. Simon Jr., bought 45,000 shares on June 10 for $591,800, which is about $13.15 each. After selling all 91,000 shares in his personal account in December for $1.3 million, or $13.95 each, those shares are now in his own account. That sale included the sale of 10,000 shares that Simon had bought on June 8, 2023, for $124,200, or $12.42 each. Simon made about $15,280 from stock he had owned for less than six months. Since he works for the company, he had to give Douglas Emmett back the “short-swing profit.”
Douglass Emmett didn’t answer when asked to make Simon available for comment.
The price of AFC Gamma stock has gone up 3.1% so far this year. The founder and executive head of the company, Leonard M. Tannenbaum, bought 88,835 shares for $1.1 million on June 5 and 6. Each share was worth an average of $12.01. Another account he used to buy the rest of the shares now owns 3.8 million shares. The foundation he used to buy 30,000 shares now owns 159,220 shares.
So far this year, Tannenbaum has bought a lot of stock. His most recent buy was on May 15, when he bought 51,310 shares for $536,180, which is about $10.45 each.
In a phone chat, Tannenbaum, who owns the most shares in AFC Gamma, said that he is excited about the company’s spinoff of Sunrise Realty Trust, a commercial real estate lending business that works with people outside of the cannabis industry. The spinoff will happen at the end of the month, he said. Tannenbaum says that he has an 18% share in AFC Gamma.
Inside Scoop is a regular column in Barron’s that talks about stock deals made by “insiders” like business executives and board members, as well as big shareholders, politicians, and other well-known people. Because they are insiders, these investors have to tell the Securities and Exchange Commission or other regulatory groups about any stock deals they make.
