Equity REIT stock prices have declined in 2017 despite strong commercial real estate fundamentals – positive rent growth and net absorption, and stable or declining vacancy rates in most asset classes. Many traditional equity REITs are trading significantly lower than their net asset values – they are trading at about a four percent discount to NAV. It begs the question, if real estate companies are doing well, why are their stock prices suffering? What do the markets/investors see that is contributing to this decline?
As you can see from the info-graphic above, data centers, infrastructure, industrial and multifamily REITs have showed positive returns. As one can imagine, given the number of big-box retailer bankruptcies in 2017, regional mall and shopping center REITs have performed the worst, while office has also performed somewhat poorly.