A number one activist investor is betting that return-to-office plans will trigger extra hassle in business actual property.
Land and Buildings’ Jonathan Litt has been shorting REITs with excessive workplace house publicity for 3 years, and he has no plans to vary gears.
The agency’s chief funding officer advised CNBC’s “Quick Cash” on Tuesday, “If you haven’t any hire will increase and your vacancies are growing and you’ve got big working bills to run an workplace constructing, you are going to fall behind quick.” are going.”
Litt beforehand warned Wall Road that an “existential storm” was about to hit the sector in Could 2020. Now, he’s saying that “the storm has descended.”
He is doubling down on the decision — citing spiking rates of interest and excessive inflation. Litt attributes them to 2 elements that he did not anticipate when he first began shorting these firms in Could 2020.
DC based mostly JBG Smith Properties One of many main shorts of Lit. That is down 58% because the World Well being Group declared COVID-19 a pandemic on March 11, 2020. JBG Smith is off 20% thus far this 12 months.
“Washington, DC is among the hardest markets within the nation right this moment,” Litt mentioned. “He has a considerable workplace portfolio.”
He says the moratorium on lending is including to the issues.
“It is not a work-from-home story anymore. It is a financing story. It is like their mall enterprise went from a mall downside to a financing downside,” Litt mentioned. “Now, it is a funding downside. And as quickly as these loans come due, there’s actually nowhere to go as a result of lenders aren’t lending within the house.”
JBG Smith didn’t instantly reply to a request for remark.