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Resource Real Estate PM says changing rates favor shorter-lease REITs

Scott Crowe expects the real estate cycle to last longer than investors typically anticipate, citing limited new supply.

Reported · Written up by our desk · Industry

Scott Crowe, global portfolio manager at Resource Real Estate, said the current interest rate environment should lead REIT investors to focus on sectors with shorter lease durations and greater sensitivity to a recovering economy, pointing specifically to hotel, apartment, and industrial properties.

In an interview with REIT.com, Crowe described the economic shift as a direct input to how investors position their real estate allocation. He also flagged prime real estate as an additional area of opportunity, noting that rent growth is being supported by low supply.

Crowe cautioned that investors may be over-allocated in net lease companies, arguing that the asset structure does not benefit from improving economic conditions but instead faces headwinds. He said while recovery is underway, it is not robust, which raises the importance of careful asset allocation.

He also suggested an extended stabilization period could make the current cycle longer than investors expect, with limited new supply likely to persist. Looking ahead in the U.S., Crowe does not expect much IPO activity for REITs trading at a discount to net asset value, and he instead pointed to the potential for additional restructurings and mergers and acquisitions.

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