The past two years have been tough for public REIT stock prices, both on an absolute basis and relative to other equities, as rising interest rates created headwinds for real estate. An inflection point for the market is drawing near, and the set-up for future REIT outperformance is looking rosier. The headwind of rising bond yields and central bank rate hikes is likely to abate and could turn into a tailwind if our view about an impending economic slowdown and decelerating inflation trends is correct. REIT valuations look cheap both when measured against private real estate and public equities. Lastly, the public REIT market is relatively insulated from the problem areas in real estate — expiring debt maturities and traditional office buildings — while significantly exposed to alternative sectors with attractive long-term growth.

Interest rates — headwinds turning into tailwinds

The sudden spike in inflation as economies reopened from COVID-19 w