This Data Dispatch is updated monthly and was last published Nov. 5. The analysis includes US equity real estate investment trusts that trade on the Nasdaq, NYSE or NYSE American with market capitalizations of at least $200 million and can offer insight into how the Street is valuing different property sectors. While valuations within the portfolio of publicly traded REITs might not match all privately owned properties, the public markets can often be a leading indicator for potential future property pricing. That insight is particularly helpful when there is little price discovery in the market due to a lack of transactions.
Publicly listed US equity real estate investment trusts closed Nov. 29 at a median 6.5% discount to their consensus net asset value per share estimates, 2.8 percentage points down from a median discount of 9.3% as of Nov. 1, according to S&P Global Market Intelligence data.
The hotel sector continued to trade at the largest median discount to net asset value (NAV) at 21.6%, down compared to a median discount of 27.0% in the previous month. The hotel sector was followed by timber at 18.6%, farmland at 17.1% and office at 14.6%.
Datacenter REITs — only two in the analysis — traded at the largest median premium to NAV, at 27.6%. The healthcare sector followed, trading at a median 20.3% premium to NAV as of Nov. 29.
Largest discounts
Industrial REIT Industrial Logistics Properties Trust traded at the largest discount to NAV among all US REITs with at least $200 million in market capitalization. The REIT closed Nov. 29 at $3.87 per share, a 68.2% discount from the consensus NAV estimate of $12.18 per share.
Office REIT Hudson Pacific Properties Inc. landed the second spot, trading at $3.85 per share Nov. 29, 61.8% down from the consensus NAV estimate of $10.08 per share.
Of the 10 public REITs with a market capitalization of at least $200 million that traded at the largest discounts, four were office REITs and two were hotel REITs.
The other three office REITs on the list were City Office REIT Inc., Brandywine Realty Trust and Paramount Group Inc., in the fourth, eighth and ninth positions, respectively.
The two hotel REITs on the top discounts list were RLJ Lodging Trust, which traded at a 41.5% discount to NAV, and Pebblebrook Hotel Trust, which traded at a 34.6% discount.
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Largest premiums
Of the 10 public REITs with a market capitalization of at least $200 million that traded at the largest premiums, seven belonged to the healthcare sector, including Welltower Inc., which closed Nov. 29 at $138.18 per share, 97.3% above its consensus NAV estimate of $70.04 per share.
Welltower was followed by CareTrust REIT Inc. and National Health Investors Inc., which traded at premiums of 58.7% and 50.4%, respectively.
Other healthcare REITs on the list were Omega Healthcare Investors Inc., American Healthcare REIT Inc., Sabra Health Care REIT Inc. and Ventas Inc.
Only two datacenter REITs were included in the analysis, of which Digital Realty Trust Inc. was in the 10th spot on the largest premiums list. The REIT closed Nov. 29 at $195.69 per share, 33.6% up from the consensus NAV estimate of $146.47 per share.
