“It's clear there's outperformance in the REIT sector,” said Mariya Letdin, associate professor of real estate at Florida State University’s College of Business on a recent webinar hosted by Nareit. Letdin joined Alex Beath, senior research analyst at CEM Benchmarking, and Nareit’s John Worth, Executive Vice President, Research & Investor Outreach, to discuss recent research examining the historical performance of REITs and private real estate.
Letdin’s recent paper looked at both historical performance of listed versus unlisted real estate and trends relating to how institutional investors are accessing the real estate asset class. Beath shared insights into CEM Benchmarking’s study comparing performance of 12 asset classes over a 22-year period using a unique dataset covering 200 public and private sector pensions with nearly $3.6 trillion in combined assets under management.
Beath noted that comparing private equity to public equity or listed equity to unlisted real estate can be quite challenging. However, as global institutional asset manager benchmarking firm, CEM Benchmarking has a “birds eye view” of performance of its clients’ portfolios. The firm’s analysis found that listed equity REITs had the second highest average annual net return over the period at 10.7% and unlisted real estate produced average net returns of 8.7% over the period—nearly 200 basis points less than REITs.
Letdin’s research also explored why pension funds continue to invest in private real estate when historical data shows REIT outperformance.