How these hot-shot investors discover unloved real estate:
t the glamorously landscaped mall on Sand Hill Road in Silicon Valley, shoppers stroll through the Hermès and Peloton outlets, jockey for a seat in the showroom Teslas and wait in a long line stretching out from the bakery. But is this hangout for the rich doomed? The very venture capitalists and Python programmers who pour dollars into it on weekends spend their working hours on schemes to extend e-commerce and make malls obsolete.
Three years ago, when REITs with retail assets looked cheap in relation to their earnings, Bohjalian and Yablon started selling them off. Counterintuitively, they added expensive REITs, like Equinix, which owns data centers, and Invitation Homes, which rents houses. The fund has recently increased its stake in Realty Income Corp. It mostly owns free-standing retail buildings leased to tenants like convenience and drug stores that are resistant to online competition.
To get an edge, target one slice of the market. Bohjalian, 53, has been a REIT tracker for 28 years. Yablon, 39, had the misfortune to start out as a telecom equipment analyst in 2000. That job quickly evaporated, but he saved his career by switching from optical fiber to bricks. Their employer, the publicly traded Cohen & Steers, is also focused. It says it was the first money manager to specialize in listed real estate securities.
Bohjalian and Yablon track obscure statistics—like megawatts and influenza rates. Trends in power consumption at data centers figured into their decision to own a collection of them called Dupont Fabros, despite that firm’s stumbles in finding tenants. They started buying at $38 not long before a takeover deal worth $61 a share came along.
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