PGIM Real Estate – Macro stabilization to benefit real estate

REITs are a source of compelling buying opportunities, according to PGIM Real Estate.

REIT fundamentals remain resilient amid elevated macro concerns at a time when REITs should stand out due to their inflation-hedging characteristics and limited supply chain exposure., according to PGIM in its 2023 outlook.

Adding to their appeal, many REITs trade at historically deep discounts to their NAVs, offering investors opportunities to use public markets to gain exposure to real estate assets at prices well below their private market value. One of the biggest opportunities is this disconnect between private real estate pricing and public real estate pricing. From a valuation perspective, market volatility leaves REITs looking overshot to the downside relative to value of real estate assets they hold, creating an attractive arbitrage opportunity.

Limited exposure to inflation is another attractive attribute. Properties with triple-net leases, where most of the burden of