Non-Traded NAV REITs Outperform Traded REITs as COVID-19 Impacts Real Estate Values
The COVID-19 pandemic is taking its toll on real estate securities, with extreme volatility walloping returns in the traded market, according to investment bank Robert A. Stanger & Company.
According to investment bank Robert A. Stanger & Company, the COVID-19 pandemic is taking its toll on real estate securities, with extreme volatility walloping returns in the traded market.
The MSCI US REIT Index Gross Total Return (RMS G), a measure of performance of traded real estate investment trusts, fell 27 percent during the first quarter of 2020, sinking the 36-month total return of the broader REIT market to an 8.8 percent loss.
Non-traded net asset value REITs posted less dramatic declines for the most recent quarter, suffering a 4.5 percent loss as measured by the Stanger NAV REIT Total Return Index, but posted a cumulative total return of 17.4 percent for the most recent 36-month period.
Stanger expects substantial recoveries in the public markets in the coming months as the economic fallout of the COVID-19 pandemic subsides, but also expects further near-term impact on both public and private market real estate values.
While the impact of the pandemic has hit the underlying net asset values of both traded and non-traded REITs, Stanger noted that stock market volatility has significantly impacted traded REIT securities values.
“This performance only serves to highlight the benefits of a non-listed REIT vehicle, providing a real estate-based return without the extreme ongoing volatility of the traded market,” according to Kevin Gannon, chairman and chief executive officer of Stanger.
Robert A. Stanger & Co 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, capital formation and financings, mergers, acquisitions, reorganizations and consolidations.
