VRAI - REITs Are No Longer Cheap

• In our "State of the REIT Sector" report, we analyze recently-released NAREIT T-Tracker data to review high-level REIT fundamentals over the past quarter through a series of charts.
• REITs are no longer cheap, but premium valuations have revived the "animal spirits" and sparked a much-needed wave of M&A and IPO activity which has facilitated accretive external growth.
• FFO per share was 5% above the third quarter of 2019, but dividend distributions are still 20% below that pre-pandemic period. Payout ratios remain historically low, indicating significant embedded dividend growth.
• With six completed IPOs and four more on the way, 2021 will go down as the most active year for REIT IPOs since 2013. At the same time, several mega-sized non-traded REITs have scooped up public REITs.
• REITs have acquired nearly $50B in net assets over the past year - the largest expansion in the asset base since 2015. External growth may be just getting started as REIT balance sheets - and access to capital - have never been stronger.

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