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REITs' price-to-NAV on the rebound

Since hitting a five-year low in February, real estate investment trust prices have trended upward, bringing the price-to-net-asset-value ratio for the SNL U.S. REIT Equity index to a discount of 2.1% as of Aug. 27, just below its five-year average discount of 1.9% and above February's 15.0% discount.

Price-to-NAV ratios for the index have fluctuated widely in recent years, peaking at a 13.3% market-cap-weighted premium in January 2015.

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Excluding any pending merger targets, data center REITs currently trade at the largest median premium to their respective five-year price-to-NAV averages, at 4.3 percentage points. Digital Realty Trust Inc. currently trades at the largest premium of the group, at 5.6%, 4.3 percentage points above its five-year average of 1.3%. CyrusOne Inc. trades at a 4.3% premium, 6.7 percentage points above its five-year average, while CoreSite Realty Corp. traded at a slight 0.4% discount to NAV, 4.0 percentage points below its five-year average. Equinix Inc. and QTS Realty Trust Inc. were both excluded from the analysis since they do not have NAV estimates for the entire five years.

At the other end of the spectrum, self-storage REITs trade at the largest median discount to their five-year averages, at 5.5 percentage points. While all four of the analyzed self-storage REITs currently trade at premiums to their respective NAV estimates, only Life Storage Inc. trades above its five-year price-to-NAV average.

While regional mall REITs still all trade at a discount to NAV, several have seen an uptick in share price as retail sales have continued to grow and the negative sentiment on the sector has started to lift. Simon Property Group Inc., Taubman Centers Inc. and Pennsylvania Real Estate Investment Trust all currently trade above their 5-year price-to-NAV averages.

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Among the 20 companies trading at the largest NAV discounts, six REITs are from the office sector, and four are from the shopping center sector.

Kite Realty Group Trust, Cedar Realty Trust Inc. and Retail Properties of America Inc. were among the shopping-center REITs trading at the largest NAV discounts. Kite Realty currently trades at a 30% discount to NAV, 15.3 percentage points below its five-year average discount of 14.6%, the greatest percentage point difference among all equity REITs.

Franklin Street Properties Corp. followed next, trading 15.1 percentage points below its five-year price-to-NAV average.

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On the flip side, single-tenant retail focused Agree Realty Corp. traded at an 18.5 percentage-point premium to its five-year price-to-NAV average, the largest among all equity REITs. Agree Realty's share price has been on a steady rise since its drop in early February and currently sits at an 18.7% premium to its consensus NAV estimate, while its five-year average was 0.2%.

Farmland-focused Gladstone Land Corp. followed in the second spot, trading 17.6 percentage points above its price-to-NAV average.

Three REITs each from the hotel and healthcare sectors were also among the 20 REITs trading at the largest premiums to their five-year price-to-NAV averages.

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For further NAV analysis, try reading S&P Global Market Intelligence's monthly NAV monitor article.