Publicly-Traded REITs May Be Better Off in This Recession Than the Last One
The lessons of the financial crisis and recent capital raising have helped prepare them for a downturn, analysts say.
September 3, 2020 | John Egan | National Real Estate Investor
Although it might feel like the publicly-traded REIT sector as a whole is in the midst of a “sky is falling” crisis, real estate experts say the outlook for REITs is more sunny than cloudy. In fact, they maintain that REITs are better positioned financially today than they were during and after the Great Recession.
“While the coronavirus crisis is not yet over, it does appear that the REIT sector is likely to avoid the type of long-term, lingering pain that was felt by the sector during the financial crisis, when it took nearly eight years for the FTSE Nareit All Equity REITs Index to recover to pre-recession highs,” says Alex Pettee, president and director of research and ETFs at Rowayton, Conn.-based investment adviser Hoya Capital Real Estate LLC.
To be sure, the REIT landscape is uneven right now. As of Aug. 31, year-to-date total returns for three pandemic-battered subsectors sat in double-digit negative territory, according to Nareit: lodging (-47.7 percent), retail (-37.3 percent) and office (-25.6 percent). By contrast, the pandemic has lifted three key subsectors into double-digit positive territory: data centers (+32.5 percent), infrastructure (+14 percent) and industrial (+11.7 percent).
