Global REITs delivered strong performance in the 3rd quarter, experiencing gains of over 16%. The gains were fairly uniform across Asia, US and Europe as investors begin to factor in cooling global inflation and the beginning of a rate cutting cycle in the US. Many of the headwinds for REITs are turning into tailwinds as we are beginning to see a bottoming of private real estate pricing globally and capital markets and transaction activity increasing significantly.
This will accelerate REIT M&A activity and privatizations as many listed REITs have attractively portfolios trading below their real estate value. There also remains a reversionary opportunity as REITs underperformed general equities over the last 5 years and relative cash flow multiples of REITs look attractively value versus general equities and the Technology sector.