Gaining Perspective

Sep 12, 2023

The rise in global interest rates is driving a “great reset” of real estate values. With the ongoing correction in private markets, REITs offer an attractive entry point with valuations at historic lows. In addition, a number of factors favor REITs:

• Large differences in valuation between public and private RE markets, while rare, have historically benefited REITs.
• REITS have historically outperformed the S&P post-Fed tightening cycles.
• REIT sectors are more concentrated in areas with strong sector secular growth, including senior housing, industrials, data centers, and residential/specialty housing.
• If the real estate repricing process continues, there will be a wave of consolidation as well-capitalized firms buy attractive properties at steep discounts.
• Longer-term, falling rates combined with an imbalance of supply and demand will be bullish for REIT valuations.

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Here is a link for more information about Rick and PGIM:

• PGIM Select Real Estate Fund- https://www.pgim.com/investments/mutual-funds/pgim-select-real-estate-fund
• US Real Estate Fund Performance- https://www.pgim.com/investments/getpidoc?file=8CE3D7D87B7CAE1285258138004284B8
• Rick’s Latest Perspectives on REITs- https://www.pgim.com/real-estate/commentary/manager-minutes-inflection-point-reits

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