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.
The NAREIT T-Tracker®, which includes data on operating and financial performance by all stock exchange-listed REITs, is now available on Bloomberg terminals, under Bloomberg Intelligence/Financials/REITs/NAREIT Data.
Which REIT Sector is Most Undervalued?
While valuations are somewhat different across different segments of the REIT industry, there is a “wealth of undervaluation” in REITs today—and investors certainly should be paying closer attention.
Why Have REITs Underperformed the Stock Market Recently?
Over the first six months of 2017 the broad U.S. stock market had outperformed the REIT market, with the Russell 3000 Index showing total returns of 8.93% compared to just 5.43% for the FTSE NAREIT All REIT Index. Dig just a little deeper, though, and this turns out not to be a “stocks vs REITs” story at all.
REITs Increase their Position within Secondary Office Markets as Demand Grows
Recently, office properties in many secondary markets have enjoyed greater demand and rising occupancy rates relative to office markets in gateway cities.
NAREIT T-Tracker Data on REIT Operating Performance Now Available on Bloomberg Terminals
The NAREIT T-Tracker®, which includes data on operating and financial performance by all stock exchange-listed REITs, is now available on Bloomberg terminals, under Bloomberg Intelligence/Financials/REITs/NAREIT Data.
Is the Real Estate Market Cycle In its Late Stages? (No.)
I think it’s very difficult to make any thoughtful (let alone empirically based) case for predicting that the current real estate market cycle is nearing its end. The evidence simply isn’t there.
Public/Private Valuation Gaps Starts to Close with Strength in Exchange-Traded REITs and Weakness in Private Transactions
Will the gap be closed through underperformance in what may be an overvalued private real estate market, overperformance in what seems very clearly to be an undervalued listed REIT market, or a little of both?
REITs Leading the Sustainability Movement Among Commercial Real Estate
The movement towards more sustainable practices continues with commercial real estate, and REITs are helping lead the charge.
What’s the Outlook for New Construction? A Peak at REIT Development Pipelines in Q4
The $64 million question in commercial real estate today is whether or not the sector is past its peak and headed for a slowdown.
Equity REITs Post 7.4 Percent Gain in FFO in 2016
Equity REITs reported a 7.4 percent gain in funds from operations in the fourth quarter, according to recently-released T-Tracker® data.
Valuing Mortgage REITs: Exactly How Enticing Should a >10% Dividend Yield Be?
The headline for the Mortgage REIT industry is a big one: the dividends paid by exchange-traded Mortgage REITs yield 10.54%, on average, as of the beginning of February 2017.
REITs and Interest Rates: Myths and Markets
Here’s the myth: an increase in interest rates is bad for real estate investors. Here’s the empirical fact: the historical evidence shows that real estate investors—at least those who invest through exchange-traded REITs—have usually done better during rising-rate environments than when interest rates were declining.
Comparing Real Estate Values in the Liquid and Illiquid Markets
There’s a persistent, predictable relationship between the liquid and illiquid real estate markets: private-side real estate valuations respond more slowly to changes in market conditions than do public-side valuations, so the values in private, illiquid markets typically lag public market values by two to five quarters on average, depending on whether participants in private markets are evaluating market conditions by looking at completed transactions or at property appraisals. Correcting for that lag can give you a pretty good sense of whether a public/private arbitrage opportunity has arisen.