John Worth, executive vice president, research and investor outreach at Nareit, was a guest on the latest episode of the REIT Report podcast.
Worth outlined some of the key messages in Nareit’s 2024 REIT Outlook, including three reasons that may make 2024 a good year for REITs. He noted that historically, at the end of a Federal Reserve tightening cycle, REITs have outperformed private real estate and equities over the following two and four quarters. “We think we saw a little preview of that at the end of the fourth quarter,” Worth said.
Meanwhile, the divergence between public and private real estate valuations continues to be quite wide. Worth said that gap is expected to close in 2024, both through REITs performing well and continued markdowns for private real estate.
In addition, REITs continue to be very well prepared for the higher interest rate environment with long maturities, low leverage, and mostly fixed rate debt. Worth noted that this can be seen as both defensive, as well as an opportunity for REITs as higher leveraged investors step out of the market.
During the interview, Worth also talked about some of the tactical and strategic opportunities that REITs might offer, whether institutional investors are likely to expand their use of REITs to complete their portfolios, expectations for global returns in 2024, and trends in global property sectors.
“We think the conditions are generally favorable. Even in a higher interest rate environment, we think REITs are really well-situated to navigate and maybe even thrive,” Worth said.
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