The Truth About REITs
Many ways the the REIT space, public REITs specifically, have been caught up in the headlines around commercial real estate and empty buildings as we've talked about previously.
And the reality is is public REITs don't have a lot of exposure to commercial real estate.
If you look at the S&P 500, for example, there's really only one commercial real estate REIT in that portfolio.
The rest of the portfolio is made up of things like cell tower REITs, data center REITs, industrial REITs, self- storage REITs, all of which have very different economic dynamics that drive their relative performance and their profitability profile.
We've talked about the data center demand and that segment of the market has been extremely strong over the course of this cycle.
But importantly, when you think about REIT, what you tap into, and it's similar to the story around MMBD, it's similar to the story around CCNR.
You've got a portfolio management team that knows this space inside out, lives and breathe REITs every single day.
And the relative performance of REIT compared to the the sort of typical allocations that people make in terms of passive beta oriented REIT strategies has been tremendous.
And so you're you're looking for opportunities in a market that's all-time highs where stuff either hasn't moved or it's underperformed and maybe you're reallocating to other segments of the market.
Reed certainly check that box and then you're able to leverage a portfolio management team which has great expertise and a strong track record in this category.
That's a nice marriage for advisers and investors who are trying to allocate to the category.
And then the other piece is that we've seen this steady wave of redemptions and gating and private reach strategies.
People piled into private reach strategies, tried to get out, were unable to get out.
We've seen some strong relative performance of public REITs relative to private REITs.
And so for investors who either have no exposure to REITs, have just been defaulting to the benchmark which has in some cases hundreds of names, some of which are low quality, some of which are high quality, some of which might be benefiting from some of these strong economic tailwinds, some of which may not be.
And then you're also maybe that subset of investor who's been in a private REIT strategy, understands the benefits of investing in real estate, but is looking for opportunities in the public sphere.
That's really where REIT comes in.
And again, if you look at the track record of performance and the opportunity set for REITs on a go forward basis and the makeup of public REITs compared to where it was say 20 or 25 years ago, it also stands to benefit from some of these economic mega trends.
