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At 30 June 2022, the P/NAV of U.S. listed real estate was -23% implying a listed market cap rate of 6.9%. Interestingly as of 31 December 2021 the numbers were -3% and 5.9% respectively. And yet, nearly 70% of real estate companies raised their Funds from Operations (FFO) growth guidance to 11.2% for 30 June 2022 (versus 10.6% 31 Dec 2021).
Does the combination of U.S. REITs trading at steep discounts to intrinsic value, supported by sound fundamentals suggest an interesting entry point? The answer needs to be seen in the light of the macro uncertainty and the confidence that investors put on forward estimates. Silver linings also have clouds.
