To The Moon

$Alexandria Real Estate Equities(ARE)$

Today we’re diving into a REIT—Alexandria Real Estate Equities, ticker symbol ARE.

Transition to ARE & REIT Commentary

So, I’ve had a few requests now for Alexandria Real Estate Equities. I’ve actually owned this stock in the past, but let me start by giving a bit of context on how I approach REITs.

I don’t typically write or post about REITs publicly—partly because there has a lot of REIT-focused contributors already, and I just let them do their thing. But the bigger reason is my REIT strategy is custom-built, simple.

That said, I’ll try to walk a fine line here: I want to provide useful insights for anyone looking into REITs without fully giving away my process. So I’ll offer some high-level tips that I think every REIT investor should know.

History with REITs & ARE

Now, REITs in general are a bit of a unique beast, and for that reason I handle them quite differently from other sectors.

As for Alexandria specifically—I do have some history with the stock. I actually owned ARE from December 2020 until April 2022, holding it for about 16 months. Over that time, my total return on the position was about 10%, while the S&P 500 was more or less flat. So yes, this one was technically a narrow win for me. However, looking at where the stock has gone since then, it's fallen another 40% or more from where I sold it. So despite the Good Market, I consider the decision to sell when I did to be a reasonably good call within the context of a down cycle.

Why I Rarely Cover REITs Publicly

So why don’t I cover REITs more often on the channel or in public articles?

One reason is that already has a massive community of REIT-focused analysts and commentators. There’s no shortage of people breaking down FFO multiples, occupancy rates, and dividend safety scores. Rather than add to that crowd, I’ve decided to let those folks do their thing while I stick to what I believe is a more holistic and strategic approach to REIT investing.

The second reason is that my REIT strategy is genuinely different from what you’re likely to hear elsewhere. It’s based not so much on traditional fundamentals like AFFO or NAV, but on a broader understanding of credit cycles, market psychology, reflexivity, and how REITs really behave during different stages of the economic cycle. I don’t want to share every detail publicly, because people do pay for access to these frameworks—but I’ll try to strike a balance today, sharing some important ideas that I think can help most investors without giving away the full playbook.

How I Think About REITs Differently

Let’s start by reframing how we think about REITs altogether.

Most REIT investors will focus on metrics like FFO (Funds From Operations), dividend yield, and various real estate “fundamentals.” But in my view, those metrics don’t really explain price action or long-term investment performance the way people think they do. Instead, I believe REITs—and real estate in general—are primarily driven by credit conditions, the cost of capital, and asset appreciation cycles that are highly reflexive.

If you’re not familiar with that last term, reflexivity is a concept pioneered by George Soros, and it’s a critical idea when it comes to understanding how REITs compound over time—until they suddenly stop.

If you’re interested in going deeper into that concept, I’d recommend two books:

1. “The Alchemy of Finance” by George Soros – This one’s a bit dense, but it introduces the reflexivity concept and shows how it played out in real estate markets, especially back in the 1960s.

2. “Mastering the Market Cycle” by Howard Marks – This is a more accessible read and contains a full chapter dedicated to real estate. Marks explains how cycles work, what to look for, and how to think about timing when it comes to assets like REITs.

What Really Drives REIT Performance

In practical terms, what actually drives REITs higher over time isn’t earnings—it’s the ability to borrow cheap money, buy appreciating real estate, and use that leverage to fuel expansion. That expansion, in turn, raises the value of the enterprise and pushes the stock price higher. It’s a feedback loop. But that loop cuts both ways—when credit tightens, the system reverses and you get a down cycle.

So rather than focusing on payout ratios or dividend growth, I focus on:

• History of outperformance and management success

• Timing of credit and economic cycles

• Avoiding sharp downturns

• Technicals as a proxy for trend reversals

In Alexandria’s case, for example, the company has outperformed the S&P 500 by more than double since the mid-1990s—even after the recent drop. That long-term history of success is critical. Many REITs don’t have it, and if they weren’t around before 2008, I usually don’t even consider them. Too many are just vehicles designed to harvest yield-seeking investor capital during uptrends and blow up in downturns.

Timing REIT Entries & Exits

As far as when to buy a REIT, I don’t rely on traditional valuation metrics. Instead, I look for confirmation of a cycle bottom—and one of the easiest ways to do that is to track the 200-day moving average. I don’t consider buying a REIT until it’s been trading above its 200-day for at least 2–3 months.

That sounds simple, but it works better than you'd think. It kept you out of the worst of the 2008 meltdown, and it helps identify when momentum has actually shifted rather than just giving a dead-cat bounce. I use more advanced tools and metrics personally, but for most people, this is a decent rule of thumb.

At the moment, ARE hasn’t broken above that 200-day average yet. So even though it might be near a bottom, I’m not buying yet. I want to see more confirmation first.

REITs in the New Interest Rate Regime

One final point I want to leave you with is this: I believe we may be entering a very different macro regime than the one we’ve experienced over the past 40 years. Interest rates trended down from the early 1980s until just recently. That created a huge tailwind for real estate and REITs.

But if we’re in a “sea change”, as Howard Marks put it, and long-term interest rates are now trending sideways or higher, then REITs might not see the same types of recoveries we’ve seen in the past. That doesn't mean they can't be good investments, but it does mean we may need to adjust our expectations and strategies accordingly.

Final Thoughts & Summary

To summarize:

• Alexandria has a strong long-term track record, even after its recent decline.

• I’ve owned it in the past and sold at a loss—but avoided an even bigger drawdown.

• REITs are cyclical assets that depend more on credit and capital flows than on earnings.

• My strategy for REITs is unique and private, but today I’ve shared key concepts: focus on the cycle, use technicals for timing, and demand a history of success.

• Be cautious right now—REITs may not recover as quickly or as powerfully this cycle as they have in the past.

I’m still holding a few REITs I bought earlier this year, and I’ve got room to add a few more if the right setups come along. But I’m not rushing into anything, and I’d encourage you to remain cautious as well.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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