NAV Monitor: US equity REITs end January at 13.8% median discount

This Data Dispatch is updated monthly and was last published Jan. 6. 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 Jan. 31 at a median 13.8% discount to their consensus net asset value per share estimates, one percentage point up from a median discount of 12.8% as of Dec. 31, 2024, according to S&P Global Market Intelligence data.

The hotel sector traded at the steepest median discount to net asset value (NAV) at 26.0%, up from 23.7% in the previous month. The farmland and industrial sectors followed, trading at median discounts of 24.4% and 23.2%, respectively.

The timber sector, which traded at the largest median discount to NAV in the previous month, closed Jan. 31 at a median discount of 21.5%, compared with a median discount of 27.8% as of Dec. 31, 2024.

Healthcare REITs — 15 in the analysis — ended January with the highest median premium to NAV. The sector traded at a 19.9% median premium to NAV as of Jan. 31, up from a 7.1% median premium at Dec. 31, 2024. The datacenter sector traded at a 12.9% median premium to NAV as of Jan. 31, down from an 18.9% median premium the previous month.

Largest discounts

Office REIT Hudson Pacific Properties Inc. traded at the largest discount to NAV among all US REITs with at least $200 million in market capitalization. Hudson Pacific closed Jan. 31 at $3.13 per share, a 69.7% discount from the consensus NAV estimate of $10.33 per share.

Industrial REIT Industrial Logistics Properties Trust ranked second on the list, closing Jan. 31 at a 67.4% median discount to NAV.

Of the 10 public REITs in the analysis that traded at the largest discounts, three were office REITs and three were hotel REITs. In addition to Hudson Pacific, the two other office REITs on the list are City Office REIT Inc. and Brandywine Realty Trust, which landed the third and sixth positions, respectively.

The three hotel REITs on the list comprised RLJ Lodging Trust, Park Hotels & Resorts Inc. and Pebblebrook Hotel Trust, which traded at median discounts of 41.6%, 41.4%, and 38.1%, respectively.

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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, eight belonged to the healthcare sector.

The top four spots were occupied by healthcare-focused Welltower Inc., CareTrust REIT Inc., Omega Healthcare Investors Inc. and National Health Investors Inc., respectively.

Welltower traded at $136.48 per share on Jan. 31, 95% above the consensus NAV estimate of $70 per share.

CareTrust REIT, Omega Healthcare and National Health Investors closed Jan 31 at median premiums to NAV of 40.6%, 35.4% and 32.8%, respectively.

Other healthcare REITs trading at the largest premiums included American Healthcare REIT Inc., Ventas Inc., Medical Properties Trust Inc. and Sabra Health Care REIT Inc.

Single-tenant retail REIT Essential Properties Realty Trust Inc. traded at a 30.0% premium to its consensus NAV estimate, while information storage-focused Iron Mountain Inc. traded at a 23.5% premium to NAV during the same period.