Frank Haggerty, senior portfolio manager for REIT strategies at Duff & Phelps, explains the rally.
What is driving U.S. REITs outperformance?
Equity REIT outperformance reflects a more favorable combination of improving property fundamentals, healthier balance sheets, better capital-market access and valuation normalization after several years of relative underperformance. The rapid rise in interest rates in 2022 forced a significant reset in the public REIT cost of capital and pressured relative returns. Since then, REIT valuations have become more attractive just as fundamentals have improved across several property types. Balance sheets are also important. Most listed REITs use relatively low leverage, maintain a high percentage of fixed-rate debt, have longer maturities and retain access to unsecured debt markets.
Which REIT property types are driving the recent surge?
The strongest areas of the REIT market have b
