Cash flow and dividend growth in the global listed real estate space are expected to accelerate further in 2022.
The Duff & Phelps Global Real Estate Securities team expects global REITs to benefit from increased economic and employment growth, as they are well-positioned to grow their businesses in a post-COVID-19 recovery period. Healthy underlying property fundamentals are expected to result in an acceleration in global cash flow and dividend growth.
Growth will differ on a regional basis as better-positioned balance sheets of U.S. real estate companies will continue to support growth through acquisitions, development, and redevelopment. In contrast, ex-U.S. companies benefit from a cyclical recovery, according to the Duff & Phelps Global Real Estate Securities team.
From a sector perspective, secular growth drivers should continue to benefit logistics, self-storage, and residential globally. However, retail, office, healthcare, and lodging recoveries will continue to vary by geographic location, asset quality, and customer orientation. Against a backdrop of solid demand, new supply continues to fall across global property sectors and should not be an issue in the near term, according to the Duff & Phelps Global Real Estate Securities team.
Variances in global growth trajectories offer value creation opportunities for long-term, active managers, making the Virtus Duff & Phelps Global Real Estate Securities Fund (VGISX) particularly well suited to capitalize on these opportunities.
The fund is well-positioned due to its focus on high quality owner-operators of enduring commercial real estate, with solid balance sheets and proven management teams, which will benefit from the ongoing improving global economic backdrop.
By focusing on rental property companies with contractual revenues, the team managing VGISX has amassed a compelling track record of risk-adjusted performance driven by actively managed stock selection.
According to Virtus, research coverage of the larger, global opportunity set of REITs is less consistent, and the space has not been inundated with passive flows. With a wide array of sectors and securities across a varied set of countries at different business cycle stages, active managers have an expanded opportunity set with which they differentiate themselves from the passive pack.
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