Market Analysis & Research

Ask anybody which investments “hedge” against inflation, and real estate is one of the three that pretty much everybody will identify, along with commodities and inflation-linked bonds

REITs have outperformed the S&P 500 in recent months, with a cumulative total return of 14.6 percent since their low point in early February.

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Mergers and acquisitions involving REITs have been in the spotlight in recent months. The flurry of proposed deals announced in just the first half of this year put the market on pace to set a new record for merger activity in 2018.

Commercial property prices in April were 9.1 percent higher than one year earlier, according to the CoStar Commercial Repeat Sales Index

REIT diversification benefits come not merely from their low correlations to other assets but also from their historically strong risk-adjusted returns. 

Current REIT fundamentals and equity market conditions suggest that investing in REITs will likely continue to have such benefits in the period ahead.

REIT returns generally have low correlations with returns from the broad stock market.  Some REIT property sectors—including Health Care, Self Storage, Residential, Infrastructure, and Data Centers—seem to be especially defensive with average correlations of 65 percent or less even during periods encompassing market crises.

Total REIT FFO was 3.6 percent higher than in the fourth quarter of 2017 and 6.0 percent above over one year ago.

It should come as no surprise that the top-performing sector of the REIT market varies through time, suggesting that most investors will want to maintain exposure to every part of the real estate asset class.