3 REIT ETFs Could Step Out of Their YTD Slump

“REITs are a good indicator of the direction of private market values. But they tend to overdo it on the way up and on the way down,” Marc Halle, managing director at PGIM Real Estate, the real-estate investment unit of Prudential Financial Inc. and head of the Global Real Estate Securities business, told the WSJ.

Analyzing Real Estate Fundamentals

As investors headed into 2018, there has been a view of weakening real estate fundamentals, but first-quarter earnings revealed in line or slightly better than expected results, Thomas Bohjalian, executive vice president at global portfolio manager Cohen & Steers Inc, said.

Among malls and shopping-center REITs, “the bottom didn’t fall out as quickly as some investors believed would occur,” Bohjalian told the WSJ, adding that Cohen & Steers has recently increased its position in some shopping-center REITs.

Investors have taken greater interest in industrial and multifamily sectors, which are enjoying strong demand and tight supply. Fitch Ratings also pointed out that multifamily REITs that have access to financing from government-sponsored enterprises Fannie Mae and Freddie Mac are more stable than other REITs if the availability of mortgage capital is disrupted.

Rising merger and acquisition activity is also adding to hopes of a rebound.

For more information on real estate investment trusts, visit our REITs category.