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REITs face a “pretty healthy” outlook as supply stays very low
CenterSquare portfolio manager Patrick Wilson cites low future supply and solid balance sheets, saying they could support “pretty healthy” earnings growth over the next 12 to 24 months.
CenterSquare portfolio manager Patrick Wilson told the REIT Report that REITs have a favorable setup, with very low supply on the horizon and reasonable demand that he expects to translate into “pretty healthy” earnings growth over the next 12 to 24 months, according to Nareit.
Wilson said higher interest rates are suppressing development across most property sectors, with the exception of data centers, while emphasizing that solid balance sheets help REITs navigate the higher-rate environment. He characterized the current period as an “attractive point in the cycle” for listed real estate.
He also argued that the “K-shaped” economy is benefiting REITs focused on higher-end consumers more than the broader commercial real estate market. Nareit reports he pointed to increased M&A activity as evidence that scale, balance sheet strength, and access to lower-cost capital are becoming more important in a higher-rate setting.
Among REIT sectors, Wilson said he is most positive on senior housing, data centers, and high-quality open-air shopping centers, with senior housing supported by demographic demand and limited supply, Nareit reported.