PLDGP - State Of REITs: The 'Dark Age' Is Over
2025-03-27 16:47:09 ET
Summary
- While the S&P 500 and other major benchmarks entered "correction territory" this month for the first time since 2023, U.S. REITs have meaningfully outperformed the broader equity market since mid-January.
- The rebound follows a truly forgettable three-year period for REITs dating back to the start of the Fed's rate hiking cycle in which REITs have accumulated 40 percentage-points of underperformance.
- REITs remain as unloved as ever: The number of publicly listed REITs declined for a fourth-straight year in 2024. As an asset class, REITs are the single-largest "underweight" among institutional investors.
- Importantly, valuations - not property-level fundamentals - are responsible for the vast majority of the underperformance, setting the stage for a sustained REIT rebound if interest rates normalize.
- That said, a property portfolio is only as good as the balance sheet that finances it. And while public REITs own the best house in the neighborhood, they haven't been immune to the impacts of the lingering rate-driven distress around them.
State Of The REIT Nation
In our State of REIT Nation report, we analyze the recently released NAREIT T-Tracker data. Earlier this month, we published our REIT Earnings Recap which analyzed Q4 results on a company-by-company level, but this report will focus on higher-level macro themes affecting the REIT sector at large....
State Of REITs: The 'Dark Age' Is Over