In 2020, positive contributors to relative performance included an overweight to the cell tower and data center sectors, and stock selection in the residential sector. An underweight to the self storage sector, and stock selection in the office and diversified sectors detracted from relative performance.
Positive contributors to relative performance included an underweight allocation to the shopping center, regional mall, and lodging sectors. An underweight allocation to the self storage sector, an overweight allocation to the cell tower sector, and stock selection within the office sector detracted from relative performance.
In the August 2020 REIT Outlook titled, “Essential REIT Evaluation: Cell Towers and Data Centers,” we continue our theme of ‘Essential’, although this time with cell towers and data centers. Both sectors have proven their ‘essentialness’ during the pandemic given the increased data consumption needed to work from home, shop online, and communicate virtually. While data traffic may return to its historical trend post-pandemic, companies are already making decisions to permanently boost capacity at data centers to accommodate for long term changes in consumer and employee behavior. Cell towers are on the cusp of a massive transition to 5G domestically, which will drive organic growth for the next decade, while international markets are ripe for consolidation through acquisitions. Both sectors have significantly outperformed throughout the year, and are sporting the highest earnings multiples among the sectors we have examined thus far. However, the Chilton REIT Strategy maintains an overweight allocation to both cell towers and data centers given the long runway for growth in dividends and the low short term and long term risk.
Previous editions of the Chilton Capital REIT Outlook are available at www.chiltoncapital.com/category/library/reit-outlook/.
An investment cannot be made directly in an index. The funds consist of securities which vary significantly from those in the benchmark indexes listed above and performance calculation methods may not be entirely comparable. Accordingly, comparing results shown to those of such indexes may be of limited use.
The information contained herein should be considered to be current only as of the date indicated, and we do not undertake any obligation to update the information contained herein in light of later circumstances or events. This publication may contain forward looking statements and projections that are based on the current beliefs and assumptions of Chilton Capital Management and on information currently available that we believe to be reasonable, however, such statements necessarily involve risks, uncertainties and assumptions, and prospective investors may not put undue reliance on any of these statements. This communication is provided for informational purposes only and does not constitute an offer or a solicitation to buy, hold, or sell an interest in any Chilton investment or any other security.
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