Jim Cramer's REIT Picks From Earlier This Year Reveal Alarming Truth

Jim Cramer is a lightning rod when it comes to scrutiny. On one hand, giving investing advice every day on air for years is naturally going to produce some losing picks. However, Cramer has become the focal point of a lot of targeted opposition. For instance, you can check out his ongoing (albeit one-sided) feud with George Noble, who is quick to call out Cramer. Or, you could check out the Journal of Retirement’s in-depth study of Cramer’s Charitable Trust performance and see that “Cramer’s portfolio has underperformed the S&P 500 total return index both on an overall returns basis and in Sharpe ratio.”

On April 5, 2022, CNBC.com published an article outlining four real estate investment trusts (REITs) (all of which focused on apartments) that could be solid investments. The article title uses phrases like cash-in and skyrocketing rent prices. Between the star and the optimism, it certainly draws you in. So, let’s review the picks.

• Independence Realty Trust Inc. IRT closed at $26.26 the day the article was published. As of market close on August 19, 2022, this REIT was trading at $21.21, down over $5 per share.
• American Campus Communities Inc. ACC closed at $59.59 on April 5 when Cramer made is picks. In early August, the company was acquired by Blackstone Core+, which is primarily comprised of Blackstone Real Estate Income Trust, Inc. A bonus for anyone who took Cramer’s advice.. Each share of the company’s common stock, issued and outstanding, at the time of the merger would eventually receive, an amount in cash equal to $65.47 per share, without interest. Thanks for the pay-out, Jim!
• AvalonBay Communities Inc. AVB closed on April 5 (time of Cramer’s pick) at $249.44 and was trading below $200 per share in July, which was down almost $55 per share. However, since July things are trending up, as the stock was trading at $214.97 as of market close on August 19, 2022. Up over $20 per share in the past month.
• Camden Property Trust CPT closed at $169.91 per share the same day CNBC published the article on Cramer’s picks. It is currently trading at $140.75, down about $29 per share since Cramer’s original picks. A sign for optimism, however, for the stock and the overall market health, is that CPT is up almost $10 per share in the past month.

Diversification is important, and it’s never a good idea to put all your eggs in one basket. However, the only way you would have made money off Cramer’s picks would have been to pick exactly which one of the four would grow at all. These results seem to be in line with the adage some use that says that you win if you go against Cramer.

However, it may be worth considering the performance of the S&P United States REIT Index. The S&P United States REIT Index defines and measures the investable universe of publicly traded real estate investment trusts domiciled in the United States. At the time of CNBC’s article, the index was at $407.32 and currently stands at $369.71. So, the index as a whole has dropped about $37 per share.

With that kind of drop to an entire market, finding success is rare. So, while it is easy to bash Cramer, he did manage to score some cash for his viewers. Additionally, these picks are meant to be long term plays, and while the market is down since his projections, they’re trending in the right direction. The bigger takeaway is that while REITs are historically a solid investment, there may be an alternative, considering all the variables the real estate market is facing today. 

The truth is that a better option for many investors is to put their money in non-traded assets like fractional real estate and real estate crowdfunding. Ownership, fractional or otherwise, may provide a more stable, gradual and safer way to see big returns.

For instance, while the S&P United States REIT index has produced negative returns of -19.49% year to date (YTD), this non-traded real estate fund is up 6.3%.

Today’s Private Market Offering Highlights

• Arrived Homes, the company that allows investors to buy shares of single-family rental homes, is set to launch 14 new rental properties on its platform with a minimum investment of $100. 
• The CalTier Multi-Family Portfolio Fund recently completed a new investment in a portfolio of four multi-family properties consisting of 185 units. The CalTier Multi-Family Portfolio Fund is one of the few non-traded real estate funds available to non-accredited investors and has a minimum investment of $500. Year to date, the fund has produced an annualized cash-on-cash return of 7.02%.

Find more current offerings and news on Benzinga Alternative Investments

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