Jan 11 Bloomberg

On a Jan. 11 webinar hosted by Bloomberg Intelligence and Nareit, panelists discussed if the end of the Federal Reserve’s tightening cycle could herald a recovery for REIT performance. John Worth, executive vice president of research and investor outreach at Nareit; Archena Alagappan, senior vice president and senior analyst at Neuberger Berman; and Thomas Arnold, academic director of the MS in real estate program at Chapman University, were the presenters. The session was moderated by Bloomberg Intelligence’s Jeffrey Langbaum, senior REIT analyst, and Lindsay Dutch, retail and industrial REITs senior analyst.

Worth provided a recap of the state of the industry in 2023, noting that REITs were in a positive place in the fourth quarter following signals that the end of a monetary policy rate rising cycle was near. He also discussed Nareit’s 2024 REIT Outlook, released last month, adding that how REITs respond to the end of this cycle is one of the key themes he expects to see for the industry in the year ahead.

“Historically…at the end of that tightening cycle, REITs tend to perform quite well—outperforming both private real estate, as well as equities in general,” Worth said.

Turning to macroeconomics and interest rates, Alagappan said Neuberger Berman is not banking on rates coming down any more than the Fed has already discussed.

“REITs have done a very good job so far focusing on their internal profiles…extending out debt maturities and relying less on the market today than…10, 15 years ago,” she said.

Elsewhere in the webinar:

  • While “a recession is not good for anybody,” REITs are relatively better placed than the broader market, Alagappan said.
  • It’s important to follow the public markets because they often lead and are therefore an indication of value, Thomas said.
  • Alagappan said there may be more deals coming to the market in 2024 for apartments, retail, office, and industrial REITs: “Deals that are on the private side that have been stalled for the last two years that ultimately come to the market.”
  • The panel also discussed the office sector, and Worth noted that “well-situated, well-amenitized office” properties are signing leases and filling up their spaces.

If you missed Bloomberg Intelligence’s Jan. 11 webinar, “Looking to the Horizon – The 2024 REIT Market Outlook: BI Analyst Briefing,” register here to receive a recording of the event.