06/12/2023 | by Sarah Borchersen-Keto

Uma Moriarity, senior investment strategist at CenterSquare Investment Management, was a guest on the latest episode of Nareit’s REIT Report podcast.

Moriarity spoke about how REITs are faring in the current interest rate climate, how their valuations compare to private real estate, REITs and their position in the capital markets, property sectors that CenterSquare is bullish on, and more.

A pause in interest rate hikes is generally expected to occur at the next Federal Reserve meeting, Moriarity said. While some are expecting a subsequent rate hike in July, “it’s fair to say that we're closer to the end (of the rate hike cycle) than we are to the beginning,” she added.

Moriarity explained that when the Fed stopped raising rates over the last four cycles, REITs have tended to outperform following that rate hike cycle ending.

“Not only do they perform really well, they actually outperform equities broadly and also private real estate,” Moriarity said. REITs are currently trading at meaningful discounts to private real estate and offer a “really great entry point for investors looking to deploy capital in real estate as an asset class," she added.

CenterSquare expects REITs to produce returns in the low-teens over the next few years, whereas returns for private real estate are seen in the mid-single digits, Moriarity said. “As we think about deploying capital here from a real estate perspective, broadly speaking, REITs screen fairly attractive because of the very discounted valuations that you're looking at today that have already been de-risked from an interest rate perspective as well as a recession perspective.”

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Moriarity also noted that CenterSquare is bullish on data centers, senior housing, and industrial.