Nareit's REIT Report Podcast CenterSquare Sees REITs as Attractive in Current Economic Environment
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May 15, 2025 Patrick Wilson, a portfolio manager at CenterSquare Investment Management, shares insights on the current favorable landscape for REITs. He highlights how these investment vehicles thrive during economic downturns due to long-term leases and high dividend yields. Wilson discusses potential opportunities within specific sectors, such as senior housing and retail, and contrasts global market trends, particularly between the US and Asia. He emphasizes the importance of active management and the evolving diversification of REITs, which now include non-traditional asset types.
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REITs' Attractive Role in Economy
- REITs are attractive due to their long-term leases, higher dividend income, and link to physical assets, especially in a typical recession.
- They act like short-duration equities, offering current income and shorter payback than growth sectors during economic downturns.
REIT/Public Market Valuation Gap
- REITs trade at roughly a 10% discount to private market values and often react first to economic changes due to liquidity.
- Historically, REIT prices revert to parity with private valuations, creating tactical opportunities for investors.
Capitalize on Market Dislocations
- REITs with strong balance sheets can capitalize on market dislocation by acquiring assets from distressed private sellers.
- Sectors like senior housing, select retail, and triple net leases may find acquisition opportunities amid refinancing challenges.