Takeaways from REIT Investor Event

Research evidence excerpt

Takeaways from REIT Investor Event

housing recovery.

• Transaction market: The overall transaction market remains challenged, with bid/ask spreads

preventing deals from passing underwriting. Management is hopeful that facilities in lease-up

from 2019- 2023 will come to market as they reach maturity.

• Valuation: We estimate CUBE's forward cap rate at 5.3%, higher than EXR at 5.2% and PSA at

5.0%. CUBE is trading at 15.7x 2026E core FFO/sh, 1.9x below the group average. We think

both of these metrics reflect unnecessarily large discounts to peers.

East Group Properties (NYSE: EGP)

• Our view: We believe EGP is a solid, differentiated play in the industrial REIT sector. Industry

stakeholders have been broadly optimistic regarding improved tenant activity particularly

post the June NAREIT conference. EGP has a unique focus on owning shallow bay industrial

buildings in key sunbelt markets. These assets have performed better over the past 3 years,

and therefore, should continue to deliver healthy stable cash lease spreads and attractive

development opportunities. Our only concern on the name has been its full valuation.

• Macro backdrop: The current geopolitical uncertainty has not meaningfully impacted tenant

activity (detailed below) as management noted these companies’ businesses have proven to

be more resilient than the market expects. This could in theory change if the Iran conflict

persisted longer than expected, and as a result, elevated inflation persisted potentially limiting

the consumer. However, this does appear to be a broader industry-wide concern today.

• Tenant activity: Demand has steadily strengthened over the past handful of quarters and has

continued post-1Q26. This has already been reflected in the company's results as it signed