Nina Jones, CPA, is the portfolio manager for the Global Real Estate Equity and U.S. Real Estate Equity Strategies at T. Rowe Price. She is also chairman of the Investment Advisory Committee for the U.S. Real Estate Equity Strategy.
Ms. Jones is also a vice president and advisory committee member of the Financial Services and Mid-Cap Value strategies. She is a member of the investment advisory committee of the Global Growth, Global Stock and Institutional Large Cap Value strategies.
Ms. Jones’ investment experience began in 2008 and she has been with T. Rowe Price since 2008, beginning in the U.S. Equity Division. Prior to this, Ms. Jones was a T. Rowe Price summer intern following payroll processor companies in the business services sector.
Prior to joining the firm, she worked at KPMG LLP in the audit and risk advisory area. She received a B.S. degree in accounting and finance from the University of Maryland and received an MBA in finance and economics from Columbia Business School.
In this 3,276 word interview, exclusive to the Wall Street Transcript, Ms. Jones picks out the reboounding Real Estate equity stocks she likes for 2021.
“All of our investing is done on a bottom-up basis using fundamental research. So, during a normal period of time when we can actually travel again, I would get on a plane and visit a lot of the areas where real estate companies own properties.
And you would understand how those locations fit into the broader market. There are locations that are better than others. There are corners that are better. Generally, that’s driven by, like I said, supply and demand.
On the demand side, do tenants want to be in that particular area? A lot of that is driven by demographics. So population growth would be a good one. Also, income of the people surrounding it.
And then on the supply side, can you construct more real estate or is the land scarce? If you have a situation where a lot of tenants would like to be in that particular area, and there’s not a lot of new construction and so the land is pretty scarce — those are areas that we would typically want to be invested in.
We have a significant investment in some of the major cities across the country like San Francisco, New York, Los Angeles, Boston, and Washington, DC. But also, in many of the Sunbelt markets as well, because they’ve had very strong population growth, which has driven good real estate dynamics in those markets as well.”
The global pandemic has highlighted several pockets of value for Real Estate equity.
“…We have significant holdings in both of our funds in industrial warehouses, so I’ll speak about that just for a second before turning to the retail side of things. I do think that warehouse demand will continue to be very, very strong.
As you noted, people want their goods faster. No one is saying I’d like my delivery to come slower. And because of that, industrial warehouses, which are holding these goods, and the tenants of those companies like Amazon need to move closer to the people and that’s what they’ve been doing.
Because of that, a significant part of our funds is in industrial warehouses. We think the demand is very strong.
So can you construct new industrial warehouses? Yes, you can. But that’s typically in the further-out areas of a city where there’s more land.
So if you do own industrial warehouses that are closer in to people, those are getting more and more valuable every day given shortening delivery times. So we continue to really like that as an investment and we have significant investments there.
Now, the flip side of that is obviously we have a lot of retail real estate across the United States and across the world, some of which is declining in value. As you noted, demand for brick-and-mortar retail currently, during the pandemic, has been depressed.
Demand has been pretty weak from tenants to take space. And also, we have a lot of retail real estate across the country already. So there’s kind of a lot of supply so the pricing power is not there for landlords today.
In general, I would say it is definitely a negative that the pandemic has accelerated. We do think though, that for example, grocery stores have continued to have significant traffic during the pandemic, and they are embedded within their local communities.
We still believe that those are important pieces of real estate that are difficult to replicate. So we are more positive on grocery-anchored retail real estate that sits within local communities.”
Real Estate equity stock picks from T. Rowe Price will have their moment in the sun:
“I think now is a good time to invest in the real estate market. The stocks have gone down because of the pandemic.
So your ability right now to invest in very good real estate at reasonable prices is really good. I believe that many of the impacts to demand that we’ve seen have been driven by the pandemic and when the pandemic abates, demand should improve and we should see better results from the real estate companies going forward.
Also, what happens in a recession is that construction slows down and potentially is significantly reduced for the next few years. That will also help a real estate recovery over the next few years as there will be fewer commercial and apartment buildings constructed in the next few years than there were in the past few…
Hotel demand has been severely reduced in the global pandemic.
Again, I think that that is a short-term phenomenon that will bounce back in the next few years. And so I think that investing in hotels today is also very attractive as an interesting opportunity for us as investors…
I do think travel will come back. I think it will come back at a different pace for different types of hotels. So the resorts, and the more local or suburban-type hotels will see demand first and will recover first.
And then later, the more urban properties and group-driven, as you mentioned, convention-type hotels, will recover later.”
Get the Real Estate equity stocks in Ms. Jones’ portfolio and their details by reading the entire 3,276 word interview, exclusively in the Wall Street Transcript.