Foreign institutional investor ownership in US REITs grows

Institutional investors headquartered outside the US own approximately 17.3% of the total market capitalization of US equity real estate investment trusts.

This figure is up roughly 77 basis points from a year ago, when ownership by foreign institutional investors accounted for about 16.5% of total market cap, according to an S&P Global Market Intelligence analysis of the most recent public filings as of March 4.

Investors based in the UK own about $58.51 billion of US REITs' market value, the highest exposure among all foreign institutional investors in the sector. Norwegian investors have the second-highest exposure, followed by investors based in Canada.

Top British investors include Legal & General Investment Management Ltd., which has $16.55 billion of holdings in US REITs, including Prologis Inc., Equinix Inc. and American Tower Corp.

Other top UK-based investors are Northern Trust Global Investments, Pictet Asset Management Ltd., HSBC Global Asset Management (UK) Ltd. and Janus Henderson Group PLC.

Stability and performance

"US REITs offer a level of stability and performance that isn't currently matched by real estate investments in the UK," Ana Kekovska, group head of corporate services at Crestbridge, wrote in emailed comments to Market Intelligence.

The US REIT market is also more mature with more diversified holdings by both asset class and geography, Kekovska said, adding that the market has significantly larger exposure to high growth sectors such as infrastructure, datacenters, healthcare and residential properties.

"Combined with a stronger economy than currently being experienced in the UK, US REIT shares are showing stronger performance than UK listed real estate." Crestbridge is a Jersey-based firm focused on private equity and real estate administration.

– For further institutional investor research, try the Investor Targeting tool on S&P Capital IQ Pro. – Read more real estate news and analysis from S&P Global Market Intelligence. – Set email alerts for future Data Dispatch articles.

Overall, Norges Bank Investment Management had the largest market value owned in US equity REITs at $35.60 billion.

Among its largest holdings are Simon Property Group Inc., Welltower Inc., Digital Realty Trust Inc., Equity Residential, Alexandria Real Estate Equities Inc., Equinix, Invitation Homes Inc., AvalonBay Communities Inc. and Prologis.

Top REITs for foreign investors

By property sector, foreign investors held roughly $14.14 billion in office REITs, or 21.6% of the total office REIT market cap.

Investment in residential REIT holdings totaled $35.19 billion, or 19.3% of the sector's market cap. Holdings in specialty REITs — a category that includes REITs focused on advertising, casino, communications, datacenter, farmland, energy infrastructure and timber — aggregated to $77.38 billion, or 18.4% of the sector's market cap.

Alexandria Real Estate, which owns life sciences real estate, had the highest market value held by foreign institutional investors. Of its $22.04 billion market cap, foreign investors held about 28.7% or $6.32 billion.

Among the top 20 REITs with the largest market capitalization held by investors based outside the US, five are from the residential sector —including single family, multifamily and manufactured home REITs — and five are from the office sector.

Over the past 12 months, telecom tower REIT Crown Castle Inc. logged the highest year-over-year percentage increase in foreign ownership, which jumped 5.8 percentage points to 20.5% as of March 4.

Industrial REIT Rexford Industrial Realty Inc. recorded the largest percentage decrease in foreign ownership, which went down 7.3 percentage points to 12.6% as of March 4.