The Market Commentary blog on reit.com presents analysis of the macro- and micro-economic fundamentals impacting the REIT and commercial real estate industry. The Nareit economics team offers their commentary on the state of the market, the outlook for commercial real estate and breaking macroeconomic news. The opinions set forth here are solely those of its author(s), and do not necessarily reflect the views of the Nareit or its membership.
Construction Activity Begins to Slow, Boosting the Outlook for REITs and Real Estate
REITs and other owners of commercial properties are likely to benefit from a favorable balance of supply and demand in the months ahead.
How Do Market Interest Rates Affect REIT Returns?
An increase in interest rates might be cause for concern if it were predicted to come with no accompanying increase in net operating income—but it’s those changes in net operating income, not the interest rates themselves, that should attract the closest attention of investors in any equity asset such as real estate.
Income and Capital Appreciation from Real Estate Investing: The Participation Trophy and the Performance Record
There’s little difference between the income earned by the largest, most sophisticated investors in private equity real estate and the income earned by the smallest individual investors in listed equity REITs.
Mortgage REITs Combine Current Income, Long-term Total Return and Portfolio Diversification
Mortgage REITs are an investment in real estate finance that combine high current income with long-term total return and portfolio diversification. MREITs have delivered a 21.2 percent total return over the past year, outpacing most other investments over this period.
REIT Volatility, Correlation, Beta, and Alpha as of Mid-2017: Not Your Father’s Small-Cap Value Stocks (Thank Goodness)
Listed equity REITs have generally outperformed small-cap value stocks, posting slightly higher returns but substantially lower volatility and substantially better diversification benefits.
Single Family Rental REITs: Long-term Players Providing Additional Housing Options
Single Family Home Rental REITs have established themselves as long-term players providing additional housing options at a time when the housing market continues to recover.
Comparing Listed REITs with Private Equity Real Estate: What the Cambridge Associates Data Have to Say
Cambridge Associates reports that private equity real estate funds have underperformed listed equity REITs by 3.91 percentage points per year over the past 25 years.
REIT Industry FFO Exceeds $15 Billion For The First Time Ever
The listed REIT industry continues to grow and prosper. Total Funds from Operations (FFO) of listed Equity REITs rose 7.9 percent in the second quarter, to $15.6 billion, according to the NAREIT T-Tracker®.
Taking Advantage of Temporary Disconnects in the REIT Market
Value-oriented and momentum-oriented investors look to take advantage of different opportunities: value investors look for stocks selling well below normal, while momentum investors look for stocks that have done well recently. Both opportunities can be found today among sectors of the REIT market.
Jobs Numbers Bode Well for Office REITs
Nonfarm payrolls rose 209,000 in July, signaling that the economy has good momentum at mid-summer, while office jobs in Gateway Cities have rebounded in recent months..
Commercial Real Estate Markets Have Settled in for the Long Haul
Commercial real estate markets appear to have settled in for the long haul. New supply and the growth of demand are roughly balanced in most property sectors, vacancy rates are stable and rents growing modestly.
Relative Valuations in the Public and Private Real Estate Markets
Appraisal-based valuations in private real estate markets are being systematically reported at levels that exceed those of reported transactions—in which case there may be more valuation risk in private equity real estate markets than many institutional investors realize.