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US REIT median implied cap rates hold steady in Q2

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US REIT median implied cap rates hold steady in Q2

The median implied capitalization rate for U.S. real estate investment trusts held steady at 7.0% as of the end of the second quarter, unchanged from the prior quarter and a slight 13-basis-point increase year over year.

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Click here to download S&P Global Market Intelligence's U.S. Real Estate Field Calculations template that includes a line-by-line breakout of the implied capitalization rate calculation.

While the all-U.S.-REIT median implied cap rate remained mostly constant, median implied cap rates for several property sectors fluctuated year over year.

The median implied cap rate for "other retail" REITs — comprising single-tenant retail and outlet center REITs — increased by 114 basis points to 7.5% at quarter-end, the largest yearly increase of any property sector.

The hotel sector median implied cap rate grew to 9.5%, the highest rate among all the property sectors at the end of the period and an 80-basis-point jump over the year-ago figure of 8.7%.

The median implied cap rate for office-focused REITs increased 75 basis points to 7.7%.

On the other hand, the specialty sector median implied cap rate fell to 7.6%, a 105-basis-point drop year over year. The specialty sector includes advertising, casino, communications, energy infrastructure, farmland, prison and timber REITs.

Self-storage REITs continued to hold the lowest implied cap rates of any property type, at a median of 5.2%, followed by residential, industrial and regional mall REITs, with median implied cap rates of 5.7% each.

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