Market Commentary

REITs have a strong presence in the office, apartment and hotel markets in both surrounding areas of Amazon’s new headquarters and will be important players in the next phase of development of these cities.

When discussing the outlook for retail, it’s important to keep in mind the distinction between the impact on retail stores and what it means for the owners of retail properties, including REITs.

REITs have relied increasingly on a low-cost, flexible way of raising equity capital as they have expanded their issuance through At-the-market (ATM) programs.

New indices introduced by Green Street allow us for the first time to compare property price performance to total returns for property types outside of the traditional core REIT sectors.

The recovery in housing markets has generated concerns among investors in apartment properties that a rebound in homeownership could undermine the demand for apartments. Nothing could be further from the truth!

A comparison of recent trends of the P/E ratio for the S&P 500 to the price-to-FFO ratio for REITs shows a contrasting risk/reward tradeoff between the broad equity market and REITs.

Most private equity investment managers measure their performance using IRR, and illustrates how SLOCs and forward commitments can be used to manipulate IRR computations to make performance appear better than it really is. 

Net operating income (NOI) of listed REITs rose nearly 50 percent over the past four years. The steady increases in same-store NOI at a pace above the inflation rate should continue to drive earnings, and valuations, upward in the future.

There are a multitude of signs that REIT performance will likely remain strong in the months ahead.

Are low cap rates flashing a signal that speculative pricing is setting the market up for a correction? 

It is often said that “correlations spike to one during a crisis,” but REIT-stock correlations have actually been lower during the worst stock market downturns in history, reinforcing the case for REITs as a portfolio diversifier even during crises.

The economy is enjoying above-trend growth, with some boost from last year’s tax cuts, which supports demand for nearly all types of commercial real estate.