Green Street



Reuters: Real estate stocks have room to gain, residential in favor

According to Reuters,

The once-sleepy U.S. real estate sector could be poised to continue its revival into the second half of 2019 but investors are selective in their bets on property companies.

While residential and industrial Real Estate Investment Trusts (REITs) are the most popular bets, office REITs look less attractive and retail is out of favor.

The dividend-rich, slow-growth S&P 500 Real Estate index .SPLRCR has risen 18.5% so far in 2019, beating the S&P 500’s 16.99% gain. Unless the tide turns, real estate is on track for its biggest annual advance since 2014.


Cedrik Lachance, Director of REIT Research at Green Street Advisors said residential REITs are benefiting from trends such as “limited supply and pricing power that’s good to great depending on the subsector.”


“We’re cautious about the office business,” said Green Street’s Lachance. “There’s been a fair amount of supply and at the same time there’s been a trend in towards densification. You’re sitting closer to your colleagues than you were before.”


Since the U.S. real estate sector has underperformed in the last five sessions with a 4% decline versus the S&P’s 1% drop, Green Street’s Lachance says REIT’s have moved back “squarely into fair value range.”

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