This Data Dispatch is updated monthly and was last published Oct. 3. 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. 1 at a median 9.3% discount to their consensus net asset value (NAV) per share estimates, 5.2 percentage points up from a median discount of 4.1%, as of Sept. 30, according to S&P Global Market Intelligence data.
Largest discounts
The hotel sector traded at the largest median discount to NAV in October, at 27.0%, followed by the timber sector at 21.4% and farmland at 19.3%.
Of the 10 public REITs with a market capitalization of at least $200 million that traded at the largest discounts, three were hotel REITs and three were office REITs.
Eleven hotel-focused REITs were included in the analysis, of which RLJ Lodging Trust traded at the steepest discount, landing the fifth position on the list, with a 49.8% discount to NAV. Other hotel REITs on the top 10 discounts list included Pebblebrook Hotel Trust and Park Hotels & Resorts Inc.
Industrial Logistics Properties Trust, an industrial REIT, logged the largest discount to NAV among all US REITs with at least $200 million in market capitalization. The REIT closed Nov. 1 at $3.43 per share, 71.8% below the consensus NAV estimate of $12.18 per share.
Office-focused Hudson Pacific Properties Inc. was second, closing the first day of the month at $4.11 per share, 62.0% below the consensus NAV estimate of $10.80 per share. Other office REITs on the top 10 discounts list included City Office REIT Inc. and Brandywine Realty Trust, which occupied the fourth and eighth positions, respectively.
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Largest premiums
The datacenter sector traded at the largest median premium to NAV as of Nov. 1, at 23.5%. Only two datacenter REITs were included in the analysis, of which Digital Realty Trust Inc. landed among the largest premiums list.
The healthcare sector followed the datacenter sector, trading at a median 19.4% premium to NAV as of Nov. 1. Of the 10 public REITs on the largest premium list, seven belonged to the healthcare sector, including Welltower Inc., which traded at the largest median premium to NAV among all REITs with a market capitalization of at least $200 million.
Welltower ended Nov. 1 at $133.27 per share, 89.9% above the consensus NAV estimate of $70.17 per share. CareTrust REIT Inc., another healthcare REIT, landed the second position on the top 10 premiums list, trading at 73.9% above the consensus NAV estimate.
Other healthcare REITs on the list were Omega Healthcare Investors Inc., National Health Investors Inc., Ventas Inc., Sabra Health Care REIT Inc. and American Healthcare REIT Inc. on the fourth, fifth, sixth, seventh and tenth positions, respectively.
The "other retail" sector, which consists of outlet center and single-tenant retail REITs, was trading at a median 5.2% premium to NAV at Nov. 1. Ten REITs from this sector were included in the analysis, including Essential Properties Realty Trust Inc. which grabbed the ninth position on the largest premiums list.
