Edward F. Pierzak

The Strategic Property REIT Execution and Delivery (SPREAD) team at Teacher Retirement System of Texas (TRS) recognized the opportunity in the current divergence and seized it with a $400 million commitment for a tactical investment in U.S. public equity REITs. The investment yielded a 17.1% internal rate of return (IRR) with $47 million in profit.

Retailers have long been adept at catering to consumers’ desires to get more for less. In the mid-1960s, Kmart started its Blue Light Specials.

At the start of the year, economists and financial markets anticipated that the Federal Open Market Committee (FOMC) would embark on a series of target fed fund rate cuts in 2024.

Today’s property market is generally marked by supply-demand imbalances, yet not all segments of the commercial real estate market have exhibited the same levels of operational performance.

Commercial property performance and valuation metrics diverge from time to time.

Data from CoStar highlight the current state of the commercial real estate market.

Space market fundamentals can differ markedly across property types. Net absorption (demand) and net deliveries (supply) for the four traditional property types (retail, apartments, industrial, and office) highlight the ups and downs of the space markets and can illustrate excess net demand (net absorption less net deliveries) for each sector.

Nareit research has shown that REIT total returns have tended to bounce back and even surge after periods of significant REIT underperformance relative to private real estate.

No Fed interest rate cuts? No problem: With their disciplined balance sheets, U.S. public equity REITs may not be immune from higher interest rates, but they are reasonably well-insulated from them.