Link between commercial REIT value and the company share value

adindas

jake_jones99 said:

I am comparing two types of investment. First we have supermarket stock (ASDA, Tesco etc. - or an index tracking them). Second, we have the Real-Estate Investment Trusts (REITs) with a focus on commercial properties (such as Supermarket Income REIT). Clearly, if supermarkets do well, then they pay the rent on time and the corresponding REIT will also do well (that's the explanation I found so far). I've got 3 questions and would be very thankful for any insight:

1. If someone would like to bet on supermarkets doing well, would it make sense to go for REITs or supermarkets themselves?
2. Is the link between the REIT value and business performance that strong? (i.e., are rent defaults for big corporations so often and thus significant?)
3. Wouldn't the rent be "blind" to the success of the business, or would it go up/down depending on it?

This is what I believe and What I have learnt. I am mot familiar with REIT investing but I understand the following principles apply to any stock.

1. The answer to this is well written in any sound investment literature, BOTH.

Peter Lynch: Know what you own and why you own it.

Warren Buffet: It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.

2. There is any link certainly yes from 1. But that link could be blur, less correlated example for this is the presence of exuberance, Insider trader, fraud, P&D if it is start up small cap companies. There are a lot of stock valuation tools, REIT valuation but it is not be 100% correct as it is data driven, forward looking. If the people are not getting involved in the day to day operation so they could not see it directly, they are relying the information from the surface, what the companies have been reporting in the public domain. There is no valuation modelling could incorporate The presence of exuberance with high degree of accuracy, whether there is fraud getting involved.There is a score that could be calculated to detect the fraudulence activities such as  Beneish M score. Rare but sometimes this value is available in the analytical tools. If people want to do it by themselves it is not worthy to calculate it. Never mind the accuracy does not live up to expectation.

3. Again 1&2.

People will need to do their own research and make decision based on what they believe.

tichtich

News about SUPR:
https://www.proactiveinvestors.co.uk/companies/news/1013071/supermarket-reit-s-latest-tesco-acquisition-proves-further-valuation-slide-1013071.html?rel=scroll

I'm still holding back on buying any commercial REITs.

jake_jones99

Interesting that they would sell some stores to buy others (I thought they would pay off their debt). Anyone has any clue of what the strategy might be?