AEW Capital's total REIT holdings increase sequentially; 3 new stakes added

AEW Capital Management LP total holdings increased 4.8% sequentially while doubling its stake in outlet center real estate investment trust Tanger Factory Outlet Centers Inc. and office REIT Boston Properties Inc.

The Boston-based money manager's total REIT holdings were at $2.68 billion as of the end of the first quarter, compared to $2.55 billion at the end of 2022, according to S&P Global Market Intelligence analysis.

AEW Capital upped its stake in Tanger Factory Outlet Centers by 177.2% to more than 1.25 million shares valued at $24.5 million as of March 31. It also increased its stake in Boston Properties by 130.1% to more than half a million shares valued at $30.5 million.

The money manager also added three new stakes during the quarter, namely Phillips Edison & Co. Inc. and Essential Properties Realty Trust Inc. in the retail sector, and Life Storage Inc. in self-storage REIT.

Life Storage is being acquired by fellow self-storage REIT Extra Space Storage Inc. in an all-stock deal announced April 3. AEW Capital trimmed its stake by 32.3% in the buyer, a position valued at $54.7 million as of March 31 — the largest sequential reduction in holdings.

Residential, retail REITs lead the way

AEW Capital increased its exposure in 20 REITs during the quarter, with the most increases taking place in residential and retail REITs as the money manager upped stakes in four REITs each in those sectors.

The asset manager also upped its stakes in three specialty REITs, a category that includes advertising, casino, communications, data center, prison and timber REITs, and healthcare REITs.

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Meanwhile, AEW Capital also increased its stakes in office, industrial, diversified and hotel REITs during the quarter.

Trimming holdings

The number of stake increases during the quarter was neck and neck with the stake reduction, with the most divestitures coming in residential REITs, followed by specialty, self-storage and retail REITs.

AEW Capital reduced its holdings in five residential REITs, while trimming its stakes in three specialty, self-storage and retail REITs each during the quarter.

AEW Capital exited its holdings in Retail Opportunity Investments Corp., valued at $26.5 million at the end of 2022, and Corporate Office Properties Trust, valued at $14.3 million.

Sectoral preference

By property sector, AEW Capital held the highest exposure to residential REITs as of March 31, at nearly $695 million, almost 26% of the company's total REIT holdings, even as the money manager increased its holdings in four residential REITs and cut down on five.

Industrial REITs were second in the standings as total holdings in the sector were valued at $547.8 million, while specialty REIT holdings totaled at $457.7 million at the end of March.