ZG - Apartment REITs: Roaring Rents And Record Inflation

• An unwelcome surprise is awaiting millions of renters across the country at the end of their lease term, many of which will see a double-digit rent increase on their renewal-offers.
• Apartment REITs continue to report stellar earnings results with record-setting rent growth near 20% while simultaneously managing to increase occupancy rates to record-highs and reduce turnover rates to record-lows.
• Higher mortgage rates have simply shifted the robust housing demand from the ownership market back towards the rental markets. Supply growth has been insufficient to meet the robust demand.
• While broader inflationary pressures should begin to ease amid a slowdown in global economic growth, shelter inflation will remain persistent given the lingering housing shortage resulting from a decade of underbuilding.
• With robust rent growth expected to continue into 2023, we remain bullish on apartment REITs and continue to lean more heavily towards faster-growing Sunbelt-focused REITs and select coastal-focused REITs.

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