Market Commentary

In making the case for an allocation to real estate in an investment portfolio, one of the oft-cited arguments is real estate’s ability to generate income.

On a global basis, data centers, industrial, and self-storage have been the strongest performing sectors in 2023.

Actively managed funds represent 7% of REIT market capitalization and they have been a key element in REITs’ long-term success because of their combined real estate and equity investment expertise and analysis.

Timber, office, and data centers led with returns of 15.9%, 10.4%, and 7.3%, respectively.

The City of Austin Employees' Retirement System (COAERS) investment team noted that its real estate allocation could be improved dramatically by adding a portfolio completion strategy of REITs, which was historically implemented solely through an open-ended, core, private markets fund system.

Effective with the 2023: Q2 quarterly review, the FTSE Nareit U.S. Real Estate Index Series has launched a property sector devoted to gaming REITs.

Differences in cap rates capture the divergence that occurred between U.S. public and private real estate markets in 2022, with public real estate cap rates (REIT implied) higher than their private real estate counterparts (transaction and appraisal).

The commercial real estate (CRE) mortgage market has changed dramatically since the end of 2021. For many real estate investors, gone are the days of low-cost, readily available property financing.

With REIT implied capitalization (cap) rates significantly higher than private real estate transaction cap rates, the attractiveness of public equity REITs has increased.

One of the dominant themes among institutional real estate investors over the past few years has been the shift toward “alternative” property types.