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Low supply and strong balance sheets seen boosting REIT earnings
CenterSquare’s Patrick Wilson expects REIT earnings growth over the next 12 to 24 months, citing interest rate pressure on development but solid demand and very low supply.
CenterSquare Investment Management portfolio manager Patrick Wilson told the REIT Report that a combination of reasonable demand, pockets of strength, and very low supply should support “pretty healthy” REIT earnings growth over the next 12 to 24 months.
Wilson said higher interest rates are suppressing development across most property sectors, but he sees a favorable setup for listed real estate given solid balance sheets. He described the current environment as an attractive point in the cycle for REITs.
He also pointed to a K-shaped economic pattern, saying it favors REITs serving higher-end consumers more than the broader commercial real estate market. Wilson cited increased M&A activity as evidence that scale, stronger balance sheets, and access to lower-cost capital are becoming more important in a higher-rate environment.
Among sectors, Wilson was most positive on senior housing, data centers, and high-quality open-air shopping centers. He said senior housing benefits from demographic demand and limited supply, while established data center REITs could benefit as AI-driven enterprise adoption grows and as development becomes harder due to moratoriums, and he projected selective recoveries in life sciences and office focused on high-quality assets.