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REITs Showing No Sign of Slowing Down

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November 27, 2019
Timbercreek

At Timbercreek, we have a comprehensive understanding of how to assess the attractiveness of REITs in the eyes of an investor.

Backed by years of experience, our skilled team can point to the potential income return on an investor’s capital. We also recognize how the contractual nature of leases result in highly visible real estate cash flows and are able to determine the sustainability of growth for future earnings.

Today, the global REIT market[1] is yielding nearly 4%, far higher than what can be earned from other industries. Dividends are growing at the pace of earnings and in some cases, including technology-focused REITs (cell towers and data centers), dividends[2] are growing 10% to 20% per annum.

We’ve observed this trend play out in 3 of the last 4 quarters with global REITs outperforming broader equities[3]. For example, in Q3 2019, global REITs outperformed global equities by 420 basis points. Similarly in Q1, global REITs surpassed global equities by 220 basis points[4].

To shed some light on current trends, REITs are forecasted to continue to outperform other sectors of the economy. The growth of the global economy coupled with lower interest rates and the falling cost of debt is having a positive impact on both housing and corporate bond markets. Further, the strength of the service sector has helped cushion the blow from a slowdown in manufacturing. Finally, unemployment is low, consumer confidence remains high, and the pace of job growth around the world is steady. We recognize each of these trends have positively influenced REIT performance on a global scale.

For more information, please click on the link below.

Timbercreek Global Real Estate Fund

This document is for informational purposes only and is not an offer or solicitation to deal in securities. Any opinion or estimate contained in this document is made on a general basis and is not to be relied upon for the purpose of making investment decisions. The statements made herein may contain forecasts, projections or other forward-looking information regarding the likelihood of future events or outcomes in relation to financial markets or securities. These statements are only predictions. Actual events or results may differ materially, as past or projected performance is not indicative of future results. Readers must make their own assessment of the relevance, accuracy and adequacy of the information contained in this document and such independent investigations as they consider necessary or appropriate for the purpose of such assessment. This document does not constitute investment research. Consequently, this document has not been prepared in line with the requirements of any jurisdiction in relation to the independence of investment research or any prohibition on dealing ahead of the dissemination of investment research. Any research or analysis used in the preparation of this document has been procured by Timbercreek Investment Management Inc. for its own use. The information is not guaranteed as to its accuracy.

 



[1] FTSE EPRA NAREIT Developed Total Return Index (USD),

[2] Company and Timbercreek estimates,

[3] MSCI World Index (USD)

[4] Bloomberg LP