REIT Market Commentary

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. Read More

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.  Read More

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. Read More

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. Read More

Using Market Signals to Predict REIT Outperformance Relative to non-REIT Stocks

It may be surprising to many investors to learn that the same data they may use to value exchange-traded Equity REITs can also be used as a tactical signal for shifting capital between REITs and non-REIT stocks. Read More

Valuing REITs in 2017: Stock Price Premium/Discount to Net Asset Value

The price-to-NAV spread estimated at the end of 2016 suggests that total returns on exchange-traded Equity REITs would average about 13.6% per year over the next five years.  Read More

Valuing REITs in 2017: Yield Spreads to Baa Corporates

The yield spread to Baa corporates as of the end of 2016 was in the bullish part of its historic range—and if a wide variety of estimates of the past relationship between spreads and forward-looking returns continues to hold, that currently bullish spread would suggest relatively bullish future total returns for investors in exchange-traded Equity REITs. Read More

Valuing REITs in 2017: Yield Spreads to Treasuries

The yield spread to Treasuries as of the end of 2016 was in the bullish part of its historic range—and if a wide variety of estimates of the past relationship between spreads and forward-looking returns continues to hold, that currently bullish spread would suggest relatively bullish future total returns for investors in exchange-traded Equity REITs. Read More

REIT Volatilities, Sharpe Ratios, Beta & Alpha, and Diversification Benefits as of the Beginning of 2017

The diversification benefits of exchange-traded Equity REITs relative to the non-REIT parts of the stock market have persisted throughout a long period encompassing an almost unfathomly severe downturn—yet they have almost never been stronger than they were as 2016 came to a close. Read More

REIT Correlations in 2017

While the factors that drive Equity REIT returns are always somewhat different from those driving the returns of non-REIT stocks, the differences between the two equity asset classes—real estate and non-REIT stocks—have rarely been more different than they are as of the start of 2017. Read More

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