This Data Dispatch is updated monthly and was last published May 2. 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 oftentimes serve as a leading indicator for potential future property pricing. That insight is particularly helpful at a time when there is little price discovery in the market due to a lack of transactions.
Publicly-listed US equity real estate investment trusts closed on May 31 at a median 16.5% discount to their consensus net asset value (NAV) per share estimates, down from a median discount of 19.1% as of April 30, according to S&P Global Market Intelligence data.
Largest discounts
The hotel sector traded at the largest median discount to NAV among all REIT sectors, at 28.7%, closely followed by the office sector, which posted the largest median discounts to NAV for several months prior to May. The office sector closed May at a 28.0% median discount to NAV.
Of the 10 public REITs on the largest discount list with market capitalizations of at least $200 million, only one belonged to the hotel sector, RLJ Lodging Trust, which occupied the eighth position among peers, closing May 31 at $9.98 per share, 42.3% below its consensus NAV estimate of $17.30 per share.
Four REITs on the list belonged to the office sector, of which Orion Office REIT Inc. posted the largest discount to NAV, at 69.3% as of May 31. The other office sector REITs on the largest discount list included Hudson Pacific Properties Inc., Brandywine Realty Trust and Piedmont Office Realty Trust Inc., which traded at a discount of 61.5%, 47.5% and 45.1%, respectively.
Industrial Logistics Properties Trust continued to trade at the largest discount to NAV among all REITs above $200 million market capitalization. The industrial REIT closed May 31 at $3.77 per share, 71.2% below its consensus NAV estimate of $13.07 per share.
Valuations for the industrial sector improved slightly in the recent month, with the overall sector trading at a median 14.7% discount to NAV, compared to a 21.9% median discount in April.
– Download an Excel Template with data featured in this story.
– Set email alerts for future Data Dispatch articles.
– Read some of the day's top real estate news and insights from S&P Global Market Intelligence.
Largest premiums
The datacenter and healthcare segments were the two sectors trading at a median premium to NAV as of May 31, at 8.4% and 1.4%, respectively.
Of the 10 public REITs on the largest premium list, seven belonged to the healthcare sector, including Welltower Inc., which traded at the largest premium to NAV on the list, as of May 31. Welltower closed May 31 at $103.67 per share, 59.7% above its consensus NAV estimate of $64.93 per share.
Welltower was followed by three other healthcare REITs, CareTrust REIT Inc., National Health Investors Inc. and Omega Healthcare Investors Inc., which traded at premiums of 42.2%, 32.2% and 29.4%, respectively.
The remaining three healthcare REITs, Sabra Health Care REIT Inc., LTC Properties Inc. and Ventas Inc., occupied the 8th, 9th and 10th positions on the largest premiums list, respectively.
Datacenter-oriented Digital Realty Trust Inc. closed on May 31 at $145.34 per share, 14.1% above its consensus NAV estimate of $127.41 per share.
