This Apartment REIT Is Back in Growth Mode
Apartment real estate investment trusts (REITs) like industry bellwether AvalonBay Communities (NYSE: AVB) have solid businesses, since they provide the basic necessity of shelter. And yet in 2020, when the pandemic bloomed, many big apartment landlords got hammered as people moved out of big cities seeking shelter from the health scare by moving to more sparsely populated regions.
Luckily for AvalonBay, that trend didn't last very long. Here's a look at the 2021 rebound and why 2022 could be a very good year for this REIT.
It's important to understand the core business here, which is renting out living space. This generally involves a one- or sometimes two-year lease. Lease lengths in other property sectors tend to be much longer, with some stretching for decades. That's no small issue, given that historically, a typical economic cycle is estimated to last about seven years. Thus, a 10-year lease would allow a REIT to maintain its occupancy and rent levels through a downturn. Not so for an apartment landlord, where almost the entire portfolio will need to be released every year.
Source Fool.com
