In the first quarter of 2024, global real estate investment trusts (REITs) gave back a portion of their large, fourth-quarter 2023 gains as investors worried about the pace of interest rate cuts in the midst of a relatively strong economy and somewhat sticky inflation. On a dollar basis, all regions experienced flat to negative nominal returns, with Europe lagging by being down nearly 5%.

Relative performance versus benchmark and peers was very strong for the quarter. We generated significant alpha through stock selection within Japanese developers, Australian industrial and retail, and health care, data centers, and an M&A target in single-family rental. We also added significant alpha within the net-lease, office, shopping-center and regional-mall sectors.

• The U.S. REIT market took a bit of a breather in the first quarter of 2024, dropping 2.96%. The move is not too surprising in hindsight given an exceptionally strong finish to 2023, with REIT gains of more than 10% in both November and December.
• The European public real estate market corrected this year in the first quarter after an impressive, 27% fourth-quarter 2023 rally in the European index. the European index returned 8.3% (USD gross total return) for March on improving inflation data that was not enough to leave it in positive territory for the first quarter, with a first-quarter 2024 total return of −5.0%.
• Faced with a backdrop of persistent inflationary pressures in the United States and a repricing of Fed cuts from as many as seven to fewer than three for this year, the Asia Pacific REIT market (+1% in USD terms) marginally outperformed the two other regions in the first quarter.