Both traded and non-traded real estate investment trusts made gains in the third quarter of 2021 as markets has recovered from the toll COVID-19 took on real estate securities in 2020, according to investment bank Robert A. Stanger & Company.
Non-traded net asset value REITs posted a record 7.24 percent return for the third quarter as measured by the Stanger NAV REIT Total Return Index, which recovered to its pre-pandemic level during the third quarter of 2020 and has since set a record each quarter.
Stanger noted that non-traded NAV REITs continue to outpace their traded counterparts with a cumulative total return of 56 percent over the last 60 months. The momentum of the MSCI US REIT Index Gross Total Return (RMS G), a measure of performance of publicly traded REITs, slowed in the third quarter, posting a 0.98 percent total return. Last quarter, the RMS G posted a 12.00 percent total return in the second quarter. Over the last 60 months, the total return of this broader REIT market index was 39.2 percent.
According to Stanger, the graph below illustrates the impact that stock market volatility plays in traded REIT securities values relative to non-traded REITs.
“This performance highlights the benefits of a non-listed NAV REIT vehicle, that historically has provided a mostly steady real estate-based return without the extreme ongoing volatility of the traded market,” said to Kevin Gannon, chairman and chief executive officer.
The Stanger NAV REIT and Stanger Lifecycle REIT Total Return Indices measure the performance of non-traded REITs on a quarterly basis. Stanger began calculating the indices on December 31, 2015, with a base level of 100.
The indices currently include 17 non-traded NAV REITs (perpetual entities that offer limited periodic liquidity at net asset value) with a total of 87 separate share classes, and 29 traditional “lifecycle” REITs (entities anticipating a five- to seven-year holding cycle followed by a liquidity event) with a total of 52 separate share classes.
All NAV REITs with a minimum of one calendar quarter of performance are included in the NAV REIT Index. Traditional lifecycle REITs are added to the Lifecycle REIT Index in the quarter that their first NAV is announced and are removed from the index upon listing, merger, or in the case of a liquidation by sale of properties, upon conversion to a liquidation basis of accounting.
Founded in 1978, Robert A. Stanger & Co. Inc. is a national investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, REITs, and real estate advisory and management companies in support of strategic planning and execution, capital formation and financings, mergers, acquisitions, reorganizations and consolidations.