Episode summary
John Khoury – Asymmetry and Opportunity in Public Real Estate at Long Pond (EP.474)
Capital Allocators with Ted Seides
· · Hosts: Ted Seides · Guests: John Khoury
Summary
Public real estate is still cheap, but the market has changed enough that old rules no longer apply. John Khoury says REITs are still materially down since 2022 even as the S&P has rallied, while secular risk, passive ownership, and pod-shop trading have made dispersion wider and opportunities more frequent. Long Pond’s edge, in his view, comes from using a two-year horizon to exploit the gap between intrinsic value and stock price when shorter-term players overreact to earnings and macro headlines.
He argues that the investable real estate universe is far broader than traditional REITs. Long Pond looks across REITs, hotel managers, homebuilders, data centers, manufactured housing, cold storage, office, retail, and apartment companies, ranking roughly 325 names through a process he calls the asymmetry ranker. The firm combines discounted cash flow work with qualitative judgments about management, capital allocation, incentives, and factor exposure, then sizes positions around the best risk-adjusted asymmetry rather than the highest ranking name alone.
Khoury thinks the most compelling opportunities are in high-quality secular winners that are cheap because of temporary dislocations: Sun Belt apartments, industrial, self-storage, hotels that are moving from asset-heavy to asset-light, and select cold-storage names. He is less constructive on garden-variety office and sees data centers as better opportunities in private markets than public ones. Long Pond’s new actively managed ETF, LPRE, will hold 20 to 25 cheapest names from an investable universe of about 80 high-quality real estate companies, with daily liquidity, transparency, and a 1% flat fee.
Key takeaways
- Khoury says Long Pond looks for asymmetry: a disconnect between intrinsic value and stock price that can compress over a two-year holding period.
- He believes the public real estate opportunity set has broadened, with REITs now just one part of a larger universe that also includes hotels, homebuilders, and service companies.
- He says passive flows and pod shops create more volatility and wider pricing dislocations, which Long Pond can exploit on both the long and short sides.
- He prefers high-quality secular winners like Sun Belt apartments, industrial, self-storage, and select hotel and cold-storage businesses when they are temporarily out of favor.
- LPRE will own 20 to 25 of the cheapest names from about 80 high-quality real estate companies, and Khoury says it is designed for investors who want long-only real estate exposure.
Notable quotes
“Real estate is cheap and it's great risk, but it's not loved”
“we have a view that our job is to identify and exploit asymmetry within publicly traded real estate securities”
“We look at everything through a 2-year irr paradigm”
“REITs are just under a trillion and a half and the non-reat side is actually larger than that”
“The stocks are cheap. The credit markets are friendly to real estate”
How the episode opens
Real estate is cheap and it's great risk, but it's not loved. The only gick sector in the S&P that's still materially down since 22. The gick in REITs is down almost 20% while the S&P is up 40.
What do I look forward to in the next 2 years? Not swimming against a current. I'm excited to stop talking about it and watching it happen.
I'm Ted Sides and this is Capital Allocators. My guest on today's show is John Corey, founder and managing partner of Long Pond Capital, a hedge fund that specializes in publicly traded real estate securities. After 15 years in the business, Long Pond is one of the few remaining firms in the niche.
It recently launched an active ETF, ticker LP RE, which invests in the most attractively priced stocks from Long Pond's list of the highest quality real estate businesses. Our conversation covers John's path to public real estate investing, changes in the investable universe, and the impact of passive flows and pod shops on the sector. We turn to Long Pond's investment process focused on identifying and exploiting asymmetry and cover John's perspectives on the major real estate subsectors.
We close with a discussion of Long Pond's new actively managed ETF. I hope you enjoy the show and if you do this week, why not reach out to that friend of yours? You know the one I'm talking about.
They're someone you've known forever and trust and love so much. You probably only see each other maybe every year or two these days, but whenever you get together, it's like no time had passed at all. Go ahead, reach out to them and just say hi.
When it comes up what inspired you to reach out, just tell them you thought of them while listening to the Capital Allocators podcast and maybe they want to have a listen, too.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- public real estate securities
- active etf
- passive flows
- asymmetry investing
- real estate subsectors
Companies and tickers mentioned
- LPRE
- Long Pond Capital
- LPRE
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Capital Allocators with Ted Seides
-
Aydin Senkut: Chasing Demand, Not Hype, at Felicis -
Scott Ramsower: Continuation Vehicles from the LP Seat -
Vik Uppal: Real Estate Special Situations With a Flexible Mandate -
Zack McGuire: Dynamic Allocation and Concentrated Conviction at Children's Healthcare of Atlanta -
Ben Harrison: AI Tools for the Investment Firm -
Tracy Britt Cool: The Berkshire Model for $5–50M Businesses
Capital Allocators with Ted Seides, this episode and its artwork belong to Ted Seides – Allocator and Asset Management Expert. Octagon is not affiliated with the show; this page is an independent summary.
