Median implied cap rate for US REITs ticks up in Q1 2026

The median implied capitalization rate for US equity real estate investment trusts rose 7 basis points sequentially to 7.7% in the first quarter.

On a year-over-year basis, the median implied cap rate for the US REIT sector is down 19 bps, according to an analysis by S&P Global Market Intelligence.

Cap rates for the sector rose significantly in 2022 and 2023 as the Federal Reserve's interest rate-hiking program raised concerns about the asset class.

While the median implied cap rate for the US REIT sector has declined in many recent quarters, the figure remains elevated.

The analysis included all US REITs that trade on the Nasdaq, NYSE or NYSE American with market capitalizations of at least $200 million at each respective quarter-end and can offer insight into how the Street is valuing different property sectors. While valuations within the portfolio of publicly traded REITs might not match all privately owned properties, the public markets can often serve as a leading indicator for potential future property pricing. That insight is particularly helpful when there is little price discovery in the market due to a lack of transactions.

Market Intelligence calculates the implied capitalization rate as property net operating income generated in the last 12 months divided by the REIT's implied real estate value — calculated as market capitalization, including operating partnership units, plus total debt, preferred equity, mezzanine items and noncontrolling interest, less nonreal estate assets such as cash, securities or loans.

Implied cap rates by sector

The specialty REIT sector — which includes communications, land, timber, prison, energy infrastructure, casino, golf course and advertising REITs — recorded the largest quarterly increase in median implied cap rate, up 64 basis points to 7.6%.

The diversified REIT sector followed, with a 48-basis-point increase quarter over quarter to a median implied cap rate of 9.1%.

Hotel REITs recorded a 31-basis-point increase from the previous quarter to 11.4%, still the highest median rate among all REIT property sectors.

The office REIT sector followed with a 10.2% median implied cap rate, the second-largest for the first quarter and a slight 3-basis-point increase from the previous quarter.

Regional mall operators logged the only quarterly decrease among REIT sectors, down 13 basis points to 6.9%.

The self-storage REIT sector continued to trade at the lowest median rate, at 5.8%, followed by the residential and data center REIT sectors at 6.3% and 6.7%, respectively.

Largest changes in implied cap rates

Two cold-storage-oriented REITs — Lineage Inc. and Americold Realty Trust Inc. — along with timber REIT Rayonier Inc. topped the chart with the largest quarterly increases in their implied cap rates, all up 1.2 percentage points.

Office REITs Empire State Realty Trust Inc. and Alexandria Real Estate Equities Inc. followed with increases of 88 bps and 80 bps, respectively.

Conversely, advertising REIT OUTFRONT Media Inc. recorded a 1.1-percentage-point quarterly decrease in its implied cap rate to 20.9%, the largest decrease among all US equity REITs with at least $200 million in market cap.

Diversified REITs Alexander's Inc. and Global Net Lease Inc. followed with quarter-over-quarter declines of 54 bps and 43 bps, respectively.

Highest implied cap rates

Outfront Media continued to trade at the largest implied cap rate for the first quarter, closing at 20.9% despite a 1.1-percentage-point quarterly decline.

Regional mall REIT CBL & Associates Properties Inc. traded at the second-highest implied cap rate, at 16.4%.

Cold storage REITs Lineage and Americold Realty were among the 10 REITs trading at the largest implied cap rates. Americold Realty ranked third at 15.8%, while Lineage closed the quarter in the ninth spot at 13.1%.

Cannabis-oriented industrial REIT Innovative Industrial Properties Inc. closed the quarter at the sixth-largest implied cap rate for the US REIT sector, at 14.6%.

Three office REITs were also in the top 10. Brandywine Realty Trust came in fourth at 15.2%, and Empire State Realty ranked fifth at 14.7%. Piedmont Realty Trust Inc. traded at the eighth-highest rate at 13.3%.

The final two REITs in the top 10 were from the hotel sector. Park Hotels & Resorts Inc. grabbed the seventh spot with an implied cap rate of 13.8%, and Chatham Lodging Trust ranked 10th at 12.9%.

Lowest implied cap rates

Healthcare REIT Welltower Inc. traded at the lowest implied cap rate for the quarter, at 3.4%.

Multifamily-focused Aimco traded at 3.8%, the second-lowest cap rate.

Manufactured home REIT Equity LifeStyle Properties Inc. and industrial REIT Prologis Inc. followed next, each with an implied cap rate of 5.0%.