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Stanger: NAV REITs Post a Cumulative 71% Total Return Over Past 5 Years

Net Asset Value REITs posted a 1.7% return for third quarter 2022 as measured by the Stanger NAV REIT Total Return Index.

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Net Asset Value REITs posted a 1.7% return during the third quarter 2022 as measured by the Stanger NAV REIT Total Return Index.

The Stanger NAV REIT Index, which took only a moderate dip during the first quarter of 2020, has since continuously risen every quarter. According to the report, NAV REIT returns have outpaced those of their traded counterparts with a cumulative total return of 71.1% over the last 60 months. In comparison, the MSCI US REIT Index Gross Total Return, which rose 16.3% in the fourth quarter of 2021 on a strong stock market, continued its 2022 downward momentum, falling 11.6% in the third quarter 2022. Over the last 60 months, the cumulative total return of this broader REIT market index (15.5%) was less than one-quarter that of the Stanger NAV REIT Index.

“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,” according to Kevin T. Gannon, chairman and chief executive officer of Stanger. “This strong performance is the driving force behind $27.6 billion of NAV REIT fundraising in the first nine months of 2022.”

These results, as well as individual performance data on 38 non-listed REITs with a combined market capitalization of over $122 billion, are published in the newly released Fall 2022 issue of the IPA/Stanger Monitor. This individual performance data reveals Cottonwood Communities – Class A (32.4% – annualized) and SmartStop Self Storage REIT – Class A (18.1% – annualized) to be the top performing NAV REIT and Lifecyle REIT over the last 3-year period. Over the 5-year period, Blackstone Real Estate Income Trust – Class I (13.9% – annualized) was the top performing NAV REIT and SmartStop Self Storage REIT – Class A (14.0% – annualized) was the top performing Lifecyle REIT.

“In a time of market volatility and high inflation, non-listed REITs and in particular the NAV REIT structure, continue their strong performance, highlighting the portfolio diversifying benefits of real estate and its ability to improve a portfolio’s overall performance,” said Anya Coverman, president & chief executive officer of the Institute for Portfolio Alternatives.

“Our latest data substantiates what wealthy and institutional investors have known for years, that NAV REITs deliver strong returns with less volatility risk, improving a portfolio’s overall performance,” said Gannon.

The Stanger NAV REIT and Stanger Lifecycle REIT Total Return Indices measure the performance of non-listed REITs on a quarterly basis. Stanger began calculating the indices on December 31, 2015, with a base level of 100. All NAV REITs with a minimum of one calendar quarter of performance are included in the NAV REIT Index. Lifecycle REITs are added to the Lifecycle REIT Index in the quarter that their first NAV is announced. Lifecycle REITs 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. The indices currently include 16 NAV REITs with a total of 82 separate share classes, and 24 Lifecycle REITs with a total of 46 separate share classes.

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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