Non-Listed REITs Return to Growth During Second Quarter 2023
According to the latest report by investment bank Robert A. Stanger & Co., non-listed net asset value real estate investment trusts and lifecycle REITs had a combined aggregate net asset value of nearly $122 billion as of the end of Q2 2023.
According to the investment bank, the Stanger NAV REIT Total Return Index and the Stanger Lifecycle REIT Index returned to growth in the second quarter of 2023, generating returns of 0.7% and 0.8%, following two consecutive quarters of declines.
According to Kevin T. Gannon, chairman of Stanger, “Q2 was a mixed bag of performance for non-listed REITs, as the tug-of-war between strong growth and tighter capital markets continues. Early reports of same store earnings metrics are witness to strong NOI growth for REITs focused on industrial and residential properties, as well as higher earnings from increased allocations to floating rate credit investments while benefiting from fixed or hedged interest rates on the other side of the balance sheet. However, we continue to see a slow but steady expansion of cap rates drag on property values. Newer NAV REITs seem to be performing well, unburdened by legacy assets allocated to challenged sectors, and the field of new players is growing.”
According to David J. Inauen, head of research at Stanger, “Blackstone’s BREIT reclaimed its position atop the quarterly performance rankings among NAV REITs during Q2 2023. However, amidst higher interest rates, income strategies certainly appear to be outperforming growth strategies as of late for the NAV REITs. Three of the top five performers, REITs managed by FS/Rialto, PIMCO and Apollo, have portfolios with heavy concentrations in mortgage and other credit investments. Rounding out the top five is PGIM Private Real Estate Fund, whose portfolio is almost entirely concentrated in retail properties.”
SmartStop Self-Storage REIT remained atop the three-year lifecycle REIT performance chart for the fifth straight quarter. Lightstone Value Plus REIT V, which is focused on multifamily properties, was the top-performer based on the five-year total return metric. “Since it can generally be as long as a year between NAV updates for lifecycle REITs, we prefer to look at longer-term return metrics. From this perspective, it appears inflation-friendly, short-term lease strategies won out,” stated Inauen.
Robert A. Stanger & Co., Inc., founded in 1978, is an investment banking firm specializing in providing investment banking, financial advisory, fairness opinion and asset and securities valuation services to partnerships, real estate investment trusts and real estate advisory and management companies in support of strategic planning and execution, capital formation and financings, mergers, acquisitions, reorganizations and consolidations.
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