Craig Leupold, CEO of research firm Green Street Advisors, joined REIT.com for a video interview at REITWeek 2017: NAREIT’s Investor Forum at the New York Hilton Midtown.
Leupold said Green Street continues to be “very bullish” toward the REIT market and observed that most institutional investors are under-allocated to real estate at this point.
Leupold stressed that REITs are no more volatile than underlying real estate on a short-term and long-term basis. REITs have outperformed core real estate funds by 275 to 300 basis points a year, he added. That results in REITs having similar risk characteristics to private real estate, but better returns, according to Leupold.
Meanwhile, Leupold explained how Green Street’s Real Estate Analytics platform enables the firm to focus on private market fundamentals, valuations and return expectations across 50 different property markets and eight different property sectors.
“As we look at how real estate is priced relative to other capital market alternatives, we’re quite comfortable with where real estate is priced today. In fact, we’d even say it’s slightly undervalued,” Leupold said.
Meanwhile, REITs are trading at roughly a 7 percent discount to underlying real estate values on an unleveraged basis, he added.
“We see real estate as being attractively priced, but REITs as even more attractively priced,” Leupold observed.