U.S. REITs "Are REITs Cheap? - Building Blocks 2Q'26" Goldsmith

Research evidence excerpt

U.S. REITs "Are REITs Cheap? - Building Blocks 2Q'26" Goldsmith

he REIT industry. Though at the same time, Data Centers have

had similarly positive estimate revisions and vastly outperformed the REIT industry

average. This is despite valuations which average 1 turn higher than the

SHOP Healthcare REITs.

Positioned for Valuation Inflection (Residential, Industrial, Office, non-

SHOP Healthcare): All the subsectors in this cohort have had negative estimate

revisions on average YTD and share price performance which is in-line with to

below the REIT industry YTD through early June. Within this group, we think there

are multiple expansion opportunities if the macro is more supportive or there are

indications of sustainable positive momentum in key earnings metrics.

Narrative-driven Multiple Expansion (Self Storage and Cold Storage): This

cohort is comprised of subsectors which have performance approximately in-line

with the REIT industry despite estimates moving materially lower. For both Self

Storage and Cold Storage, we think investors are looking forward to the potential

for stronger growth in 2027. For Self Storage, the expiration of LA anti-gouging

restrictions is a tailwind. Though, we see limited visibility of material improvement

in supply/demand dynamics given challenges in the macro and relatively elevated

supply.

General stability (Strip Centers, Triple Net, Malls): We think the backdrop in

Retail remains stable with consistent demand and limited supply. Estimates have

moved higher through the year, in particular for Triple Nets, supporting modest

share price outperformance for the group. From here, we don't see any near-term

challenges in the group maintaining earnings growth. However, we also think