REIT returns outperform real estate funds – report
October 24, 2019 | Arleen Jacobius | Pionline.com
Real estate investment trusts outperformed unlisted equity real estate over a 20-year period ended 2017, according to a report by CEM Benchmarking Inc. for Nareit.
REITs average annualized net return from 1998 through 2017 was 10.89%, compared to an average net return of 8.09% for private real estate. REITs also outperformed opportunistic private real estate, which had an average annualized net return of 8.64% during the period. The lowest performing real estate asset group considered in the report was opportunistic funds-of-funds style with an annualized net return of 6.54%.
One reason for the better REIT performance is the higher cost of private unlisted real estate, said Alexander Beath, senior research analyst at CEM Benchmarking. Investors would expect that opportunistic real estate, which is riskier than REITs, to outperform but opportunistic does not have a higher return than REITs on a net basis, Mr. Beath said.
