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Hazelview Investments Inc. 2021 Global Real Estate Securities Market Outlook: Annualized returns of 15-20% anticipated

January 7, 2021 GMT
Hazelview Investments Inc. Logo (CNW Group/Hazelview Investments Inc.)
Hazelview Investments Inc. Logo (CNW Group/Hazelview Investments Inc.)

TORONTO, Jan. 7, 2021 /PRNewswire/ - Hazelview Investments Inc. released its 2021 Global REIT Outlook today examining the REIT market potential in 2021 and beyond. The report is a deep dive into the experienced hardships of the 2020 market, the quick monetary and fiscal stimulus-response from central banks, the notable differences in commercial real estate sector performances and the expectancy for positive trends for 2021 and beyond.

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Return Expectation

With global REIT share prices at 88% of pre-COVID levels, Hazelview Investments believes the industry is well positioned to play catch up in 2021. Real estate fundamentals typically lag economic activity by 6-12 months and Hazelview Investments expects the market to start to “price in” a recovery scenario in early 2021.

“Our global valuation models suggest that global REITs are currently at a 25% discount to intrinsic value,” said Corrado Russo, Senior Managing Director, Investments and Head of Public Real Estate Investments. “When you consider a potential two-year recovery to return to intrinsic value in combination with current dividends, you could see annualized returns in the 15%-20% range.”

Global Economic Recovery

While the economic recovery everywhere in the world will not be uniform, consensus estimates call for a global GDP growth of 4.9% in 2021. This represents the highest growth rate since 2010, a year when global REITs outperformed global equities by approximately 800 basis points.

“The headwinds experienced in 2020 will soon shift to tailwinds, as demand from pent-up and deferred travel plans, household spending, social gatherings and a return to a more normal business environment are likely to drive the recovery in 2021,” said Claudia Reich Floyd, Portfolio Manager and head of Hazelview’s German office.

The Great REIT-Opening

The report is optimistic that a suite of vaccines will catalyze the return to normalcy and 2021 will mark the beginning of the great “REIT-opening”, where there will begin to be a convergence of fundamentals and performance between the “have” and “have not” sectors within the commercial real estate industry. Since REITs are the landlords of the global economy, an improvement in GDP should bode well for REIT cash flow growth over the next 12 months.

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“There are several real estate sectors such as technology and industrial that have outperformed during the COVID-19 crisis,” said Sam Sahn, Managing Director, Portfolio Management, Public Real Estate Investments. “The dispersion of returns was the highest we have seen in 10-years. As a result, we expect the recovery to be more K-shaped than V-shaped.”

Some of the property types and geographic areas of interest include:

  • Cell towers in North America and Europe benefiting from secular tailwinds driven by 5G
  • Self-storage properties experiencing a rebound in street rents and rising occupancy rates
  • Industrial benefiting from robust e-commerce growth and supply chain optimization
  • Hotels poised to benefit from a global vaccine-driven recovery from pent-up demand
  • Multifamily communities in Canadian and the U.S. trading at significant discounts
  • Office REITs offering trading at deep discounts to private market values

About Hazelview Investments (formerly Timbercreek Equities)

Hazelview Investments is an active investor, owner and manager of global real estate investments committed to creating value for people and places. Hazelview employs a global investment and asset management team of more than 70 people in its offices in Toronto, New York, Hong Kong and Hamburg and manages CAD 8.9 billion in real estate assets.

To learn more visit hazelview.com.

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SOURCE Hazelview Investments Inc.