The outlook for global REITs is positive following the Federal Reserve’s 50 basis point rate cut, according to Matt Sgrizzi, CIO and lead portfolio manager at LaSalle.
“The Fed’s 50 basis point rate cut is a tailwind for the listed property sector and we expect a global monetary policy easing cycle to kick in further as more central banks cut policy rates or are forecasting to do so.
From a valuation perspective, Mr Sgrizzi says REITs offer positive but mixed valuation signals in a broader market context.
“REITs are trading at moderate premiums to our marked down private market real estate values, with certain sectors and regions continuing to offer sizable discounts. Private values remain challenging to pinpoint but should become clearer as the ‘bid-ask’ spread continues to narrow and transaction activity continues to increase, with the potential for an uptick in values.
“Our forward outlook for REIT returns remains constructive with financial conditions likely to be less of a headwind, growth remaining solid and strong financial positions for many REITs positioning the sector to perform well and take advantage of opportunities as they arise.
Further easing in financial conditions could serve as an additional tailwind to the sector and would be further support to real estate values,” said Mr Sgrizzi.
The SGH LaSalle Concentrated Global Property Fund was ranked 1st out of 52 funds for 5 years to 30 September 2024 within Morningstar’s Australia Fund Equity Global Real Estate Category. The fund returned 7.74 percent per annum, 2.78 percent higher than the next fund in its category for the given 5-year period*.
Mr Sgrizzi said that despite the backdrop of heighted inflation and interest rates the fund was still able to provide positive returns to its clients thanks to its strategy.
“This strategy was developed to fulfil a market gap – pursuing global investment opportunities that provide solid fundamentals over the medium to long term through a truly dynamic, high conviction approach.
“Our team was able to continue providing attractive absolute returns by investing in real estate companies offering deep value and identifying property sector and market dislocations.”
