Berkshire Hathaway Bets on Real Estate - Thoughts?

Earlier today, Berkshire Hathaway invested $377 million into Store Capital, a real estate investment trust. Obviously Store Capital is extremely happy about the recent investment as it represents confidence to other investors of Store Capital. As many of you may have known already, Warren Buffet does not believe that the US real estate market is in a bubble, however, his investment thesis isn't necessary focused on massive gains.

Buffett has said real estate was a solid investment that was less volatile than stock prices.

Monkeys, what is your opinion on the real estate market? Not too long ago there was a post signaling bad news for the future of the US real estate market. Have sentiments changed now that Warren Buffet has invested into Store Capital?

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Comments (13)

Jun 26, 2017 - 5:11pm

charmingchimp I believe this is the same company Marc Cohodes was short selling so I'm curious to know Buffet's logic for investing.

Nonetheless if Buffet is truly interested in real estate why not create a fund or group to solely focus on real estate development and or management? Plenty of opportunities and can maybe even just focus on real estate financing for the likes of Amazon for any future plans they have with their Go stores.

As for the real estate market it all depends. Housing in certain areas is still growing but for retail, office spaces, and even gas station/convenience stores are shaky at best.

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Jun 27, 2017 - 8:23am

I know Store Capital is largely focused in commercial real estate and as you said that area is not too stable lately. Perhaps Warren Buffet finds Store Capital as an undervalued company due to a recent lack of market confidence in commercial real estate.

Jun 28, 2017 - 5:43pm

FYI, Store Capital invests in Commercial Real Estate. REITs are down a ton since Q2/3 of 2016, and Store is a relatively new one that, from what I understand, was a bit undervalued to begin with. Comparatively speaking (Realty Income, National Retail Properties), this is basically a startup that has proved itself and is now gaining investments from the big guys. Pretty sure they had Oaktree Capital backing them until they got big enough.

Also, Berkshire Hathaway has owned a pretty large residential brokerage for a while.

Jun 27, 2017 - 9:09am
MonopolyMoney:

FYI, Store Capital invests in Commercial Real Estate. REITs are down a ton since Q4 of 2016, and Store is a relatively new one that, from what I understand, was a bit undervalued to begin with. Comparatively speaking (Realty Income, National Retail Properties), this is basically a startup that has proved itself and is now gaining investments from the big guys. Pretty sure they had Oaktree Capital backing them until they got big enough.

Also, Berkshire Hathaway has owned a pretty large residential brokerage for a while.

Good points and you're right about the bold. I forgot my next door neighbor sold his home through a Berkshire Hathaway realtor.

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Best Response
Jun 26, 2017 - 5:49pm

REITs are what's left after real investors took all the alpha off the table.
Market as a whole isn't in a bubble - just select regional markets - more specifically, cities - more specifically, areas of cities

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/
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Jul 5, 2017 - 10:50am

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