Market Commentary

A recent Nareit commentary examined occupancy rate momentum across the four traditional property types and found that property fundamentals have generally been soft or softening across these sectors.

The recent Cornell University/Hodes Weill’s 2024 Allocations Monitor report found that in 2023, institutions were more active allocating capital to REITs, as investors looked to capitalize on discrepancies between public and private market valuations.

Nareit tracks quarterly investment holdings for the 26 largest actively managed real estate investment funds focusing on REIT investment for insights into expert investor sentiment.

With softening fundamentals, a lingering public-private valuation problem, and muted property transaction activity, the U.S. commercial real estate market appears to be stuck in a period of stagnation.

In today’s economy, the pace of inflation has moderated, economic growth has remained healthy, the unemployment rate has held steady, the prospects of recession have lessened, and expectations for continued monetary policy easing have proliferated.

The FTSE Nareit All Equity REITs Index fell 3.6% in October, underperforming the broader stock market as the Dow Jones U.S. Total Stock Market and Russell 1000 declined 0.7%.

Norges Bank Investment Management’s real estate investment strategy combines 50% REITs and 50% private real estate investments to enhance diversification, access new and emerging property sectors, and optimize cost management.

An Australian superannuation fund identified critical gaps in both property types and geographies within its commercial real estate portfolio.

U.S. REITs raised $23.3 billion from secondary debt and equity offerings in the third quarter of 2024; $15.4 billion came from debt, $5.1 billion was raised in one IPO, and $2.8 billion came from secondary common and preferred equity offerings.

The FTSE Nareit All Equity REITs Index rose 3.2% in September, continuing to outperform the broader stock market as the Dow Jones U.S. Total Stock Market and Russell 1000 each rose 2.1%.

Dividend distributions are a vital part of the REIT total return proposition. Since 1995, Nareit has worked with representatives of the Investment Company Institute (ICI) and the Securities Industry and Financial Markets Association (SIFMA) to develop procedures for corporate members that are designed to facilitate the timely reporting of the required dividend distribution information while minimizing reporting discrepancies.