Tom Youn from Guggenheim Investments Details His Top REIT Picks

October 16, 2017

Tom Youn, CFA, is  Managing Director and Portfolio Manager for Guggenheim Investments. Mr. Youn joined Guggenheim Investments in 2009 as a Portfolio Manager focusing on REITs and other publicly traded real estate equities.  In his exclusive interview with the Wall Street Transcript in his own words, “I consider myself to be a REIT specialist and a real estate expert, if you will. Nearly my entire career has been in real estate. And so when we are evaluating our investment opportunities, we take a private market investor’s lens. We try to really understand the underlying assets, the underlying market trends, and try to identify relative value opportunities as we compare what’s happening in the private real estate marketplace compared to what’s being offered in terms of valuations of pricing in the public REIT space. And by comparing, contrasting those two markets, that’s where we often come up with our relative value views, and that’s where we uncover our opportunities.”

Mr. Youn’s portfolio provides a unique service for his his investors.   “Our solution was to combine the long-only and market-neutral long/short strategies that we successfully managed over these years. And to combine those two strategies as underlying sleeves that operate independently within the fund and also actively modulate between those two sleeves to effectively modulate the overall market exposure of the fund. So we have the unique goal — design objective — to again provide all the upside to REITs but actively mitigate the downside, we have this unique framework. We combine a long-only strategy with a market-neutral long/short strategy and apply a risk management tool on top to actively modulate between the two.”

One investment strategy for Mr. Youn’s funds is to identify discrepancy between one market and another, at a very granular level. “I would emphasize that the way we look at the world, we’re less concerned about absolute movements, so the entire REIT market or commercial real estate market moved up or down. We’re more agnostic to that. We’re more focused on relative value. So if I compare what’s happening in Austin and what they’re doing with their portfolio pipeline to let’s say what’s happening in Midtown Manhattan, they have a lot of supply coming on, and their actual rental rates are declining, which, I think, a lot of people find surprising. It’s the exact opposite in Austin. It’s probably one of the healthiest office markets, and you know, they’re still seeing market rent growth.”

The turnaround story also provides above market returns:  “…0ne more company we can talk about, this is a health care REIT called Sabra (NASDAQ:SBRA). You can notice a trend here as I like to take advantage of kind of sharp changes in sentiment. Similarly, it has some self-inflicted wounds, I’ll call it a selloff of about 25% in the shares. It merged with another health care REIT, which added a lot of risk to the company that the Street didn’t appreciate.”

Read the entire interview at the Wall Street Transcript to get the complete detail of Mr. Youn’s investment highlights.