As published in PREA Quarterly, Fall 2023
Although many institutional investors focus their property investment strategies on private equity real estate, current and expected market conditions tend to favor public real estate. With the divergence in public and private real estate valuations, public equity REITs continue to offer investors access to high quality, well-located properties at substantially discounted prices relative to the private market. REITs also appear to be well-situated with the Federal Reserve at or near the end of its current set of rate hikes. Historically, REITs have enjoyed a resurgence in total return performance after monetary policy tightening cycles end. Taking a more inclusive perspective, recent research from Norges Bank Investment Management reaffirms that differences between public and private real estate diminish over long horizons. This convergence should pique increased investor interest in REITs.
To read the full story, visit PREA Quarterly (pdf).