U.S. REITs "Deconstructing REIT Returns: A Shift in Drivers and Market R..."

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U.S. REITs "Deconstructing REIT Returns: A Shift in Drivers and Market R..."

Global Research

20 May 2026ab

U.S. REITs Equities

AmericasDeconstructing REIT Returns: A Shift in Drivers

and Market Regime - Building Blocks 2Q’26 Real Estate

Michael Goldsmith

Analyst

michael.goldsmith@ubs.com

Recent weeks have marked a clear shift away from fundamentals driving REIT +1-212-713 2951

performance

Ami Probandt

Over the past 2.5 months, REIT returns have maintained a somewhat risk-off tilt. Analyst

However, there has been a clear shift in subsector performance. We believe some of this ami.probandt@ubs.com

was driven by improving growth expectations in subsectors including Lodging and +1-212-713 2078

Healthcare. For other subsectors though, we think 1Q'26 earnings marked a "changing Justin Haasbeek

of the guards." Specifically, subsectors that had produced solid performance Associate Analyst

through March driven by improving fundamentals have taken a step back. This includes justin.haasbeek@ubs.com

Triple Net Lease and Industrial. At the same time, investor optimism has propelled +1-212-713 2014

performance higher for SFRs, Cold Storage, and Office despite limited change in their Anna O'Neil

challenged supply/demand backdrops. Said another way, we think the market has Associate Analyst

become more narrative driven. anna.oneil@ubs.com

+1-212-713 4386

Interestingly, the recent shifts in subsector performance have contributed to a Connor Mitchell

breakdown in the YTD alpha drivers for the REIT industry. Stocks with positive estimate Associate Analyst

revisions are still outperforming, indicating that earnings momentum remains a driver. connor.mitchell@ubs.com

However, correlations between total returns and FFO growth, estimate revisions, and the