Earlier this week, I was having a conversation where I was trying to explain how some REITs are able to consistently make acquisitions and grow their AUM, while other REITs are not. My view is that the difference is mainly down to their price to net asset value (P/NAV) ratio which the market assigns to the REITs. REITs with P/NAV greater than 1 are able to take advantage of this cheaper cost of equity to make yield and NAV accretive acquisitions, whereas REITs with P/NAV at or below 1 are unable to do the same – acquisitions would often not be feasible as this would result in NAV and yield being dilutive. I illustrate this with the examples below. Let’s say we have two REITs, Reit A and Reit B. Both have similar properties valued at 1 mil, and generate a gross yield of 4%. Interest costs are 2.5%,...