Industry

Surveys
Real Estate Investment
Trusts
SEPTEMBER 2022

Michael Elliott Xiong Jun Goon

Equity Analyst Industry Analyst
CONTENTS Contacts
Sales Inquires & Client
Support
5 Industry Snapshot 800.220.0502
cservices@cfraresearch.com
6 Financial Metrics
Media Inquiries
9 Key Industry Drivers press@cfraresearch.com
CFRA
10 Industry Trends
977 Seminole Trail, PMB 230
Charlottesville, VA 22901
17 Porter’s Five Forces

46 How the Industry Operates

Contributors
48 How to Analyze a Company in this Industry Raymond Jarvis
Senior Editor
54 Glossary
Atifi Kuddus, Geraldine Tan
55 Industry References Associate Editors
Marc Bastow
57 Comparative Company Analysis
Contributing Editor
47 Comparative Company Analysis

Copyright © 2022
CFRA
977 Seminole Trail, PMB 230
Charlottesville, VA 22901
All rights reserved.
CHARTS & FIGURES NEW THEMES

6 Revenue Growth
Real Estate Investment Growth

7 Funds from Operations (FFO)

Recurring EBITDA/Interest Expense What’s Changed: While
store openings have
Dividend Yield vs 10-Year Treasury
outpaced closures, high
8 Price-to-FFO inflation and recessionary
fears are seen to hamper
Price-to-NAV
retail growth in 2022. Read
Variable Rate Debt/Total Debt more on page 24.
9 Capitalization Rates
Housing Starts
Retail Food Service Sales vs. E-commerce
Retail Sales Growth

10 REITs Index Performance by Type What’s Changed: We

updated our forecast for the
11 REITs vs. S&P 500 Index industrial REIT sub-industry.
See page 33.
12 Dow Jones Equity All REIT Index vs. 10-
Year Treasury
Dow Jones Property Focus Indices
Dividend Yield

14 10-Year Treasury Yield vs Dow Jones What’s Changed: In July

Equity All REIT Equity Performance 2022, legislation was
Dow Jones Equity All REIT Index introduced to clamp down on
Financials Single-Family Rental
Operators and cap rent
15 Capitalization Rates increases on most single- and
multi-family rental units. More
16 Capital Raised by U.S. REITs details on page 43.
NCREIF Property Index Returns
EXECUTIVE SUMMARY
CFRA has a neutral outlook on the Real Estate Investment Trusts (REITs) industry, but our views on different
sub-industry property types can vary. Here are the key themes and our outlook for the next 12 months.

REITs Have Underperformed the Broader Market Index So Far in 2022

As of August 30, 2022, the Dow Jones Equity All REIT index total return was -17.2%, underperforming the S&P
Composite 1500 total return of -15.3%. While no sub-industries have positive returns YTD, outperforming sub-
industries include hotel & resort REITs (down 7.3%), self-storage REITs (down 8.5%), and health care REITs
(down 11.7%). Meanwhile, the worst performing sub-industries have been office REITs (down 28.8%),
industrial REITs (down 27.1%), data center REITs (down 23.2%), and residential REITs (down 20.3%), while
retail REITs and infrastructure REITs have performed in line (down 15.9% and 15.5%, respectively).

We Expect Key Industry Trends to Remain in Place Heading into 2023

We think industrial, residential, infrastructure, data center, and self-storage REITs will outperform through year-
end 2022 while office REITs likely lag peers. Markets turned quickly in early 2022 with higher growth stocks
experiencing significant pullbacks, as evidenced by many of 2021’s best performing REIT sectors (industrial,
infrastructure, data centers) seeing poor 1H 2022 performance. However, we believe this trend reverses in 2H
2022 as industry tailwinds such as e-commerce growth, increased data utilization, and the 5G rollout continue
to be long-term demand drivers. We see health care REITs continuing to benefit from positive demographic
trends while hotel REITs benefit from a return to travel post-pandemic, although variant and recession risks
may weigh on performance. Office REITs are likely to struggle as work from home trends stick around.

High Inflation and Rising Interest Rates Will Continue to Drive REIT Volatility
Sustained high inflation has prompted the Fed to accelerate their interest rate hiking trajectory, with current
estimates leading to rates of 3.50% to 3.75% by year-end 2022 (from 0.0% to 0.25% at the start of 2022).
Higher interest rates are a headwind for REITs as they lead to increased borrowing costs and often lower
property values. However, REITs are generally viewed as an inflation hedge due to contractual rent increases
built into leases and the concentration of “real assets” in their portfolios. Increased volatility should be expected
as investors weigh the potential impacts of these variables, with REITs able to adjust rents quickly (i.e., self-
storage, hotels) and those with limited need to raise debt likely benefiting.

Office REITs Face Difficult Outlook Amid Work from Home Trends and Potential Recession
Our outlook on office REITs is negative as the shift towards remote and hybrid work has resulted in a weak
post-Covid-19 recovery while a likely turn in the economy resulting in higher unemployment may cause a
further weakening of demand for office space. In H1 2022, physical occupancy among 10 major markets was
about 65% and at the 30% level for New York City and San Francisco.

Self-Storage REITs Benefit from Resilient Consumer and Demand for More Space
Sustained high demand since the pandemic has been driven by e-commerce growth as retailers look to utilize
self-storage facilities for “last-mile” delivery solutions and an acceleration in work from home trends requiring
people to find space for home-office setups. We believe these trends are likely to continue into 2023 while
industry fundamentals remain strong, with consumers length-of-stay at self-storage facilities rising in 1H 2022.

Shortages in U.S. Housing Supply and Low Affordability to Boost Residential REITs
We believe the pendulum for rent versus buy is moving back strongly in favor of rental properties, as
affordability and availability make owning a home extremely expensive today. As a result, we believe multi-
family and single-family rental units are poised to outperform into 2023.
Industrial REIT Fundamentals Remain Exceptional, Despite Significant New Construction Pipeline
We believe the secular shift towards e-commerce is likely to continue moving forward, helping keep demand for
industrial real estate elevated. Meanwhile, we think rental rate growth can remain in the high teens for premier
industrial REITs through 2022 as vacancy remains near historic lows. While new supply in 2023 is likely to
outpace net absorption, we think industrial REITs concentrated within Tier 1 markets will be more insulated
from this new supply growth due to limited available space and significant zoning restrictions.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 4

 REAL ESTATE INVESTMENT TRUSTS (REITs)
Outlook: Neutral
MARKET CAP BREAKDOWN* BY THE NUMBERS
RANK COMPANY MARKET
NO. NAME CAP
($ billion)
3.1%
1 American Tower 124.9 $1.6 trillion Average
2 Prologis 98.3 FTSE Nareit All dividend yield
3 Crown Castle 76.8 REITs market for the Equity
4 Equinix 62.8 capitalization REITs Index as
5 Public Storage 61.5 of August 2022
Others† 824.7
Source: CFRA, S&P Global Market Intelligence
*Data as of August 25, 2022.
†Refer to the “Comparative Company Analysis”
section of this survey for the list of companies.

ETF FOCUS
12.9%
VNQ AUM ($B)
Expense Discount of U.S. -11.5% Y/Y
Vanguard Real Ratio equity REITs from Decline in
41.1 0.12 consensus S&P P/FFO multiple
Estate
Global NAV per for August 2022
share estimates
Expense
SCHH AUM ($B)
Ratio
Schwab U.S. REIT 6.3 0.07

REET Expense
AUM ($B)
iShares Global Ratio
3.1 0.14
REIT
14.1% -40 bps Y/Y
Decline in
Expense Estimated
ICF AUM ($B) revenue growth
Implied Cap
iShares Cohen & Ratio Rate for Q1
2.7 0.33
for 2022
2022
Steers REIT

HISTORICAL INDEX PERFORMANCE

120%
S&P Composite 1500
100%
S&P Composite 1500 - Equity Real Estate Investment Trusts
80%
60%
40%
20%
0%
-20%
2017 2018 2019 2020 2021 2022*
*Data through August 25, 2022.
Source: CFRA, S&P Global Market Intelligence.

5 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

FINANCIAL METRICS

Revenue Growth
(aggregate value weighted per share, $) (in percent) ◆ Revenue grew 2.7% in 2021. We expect revenue
36 20
growth to remain strong moving forward, with
growth of 14.2% in 2022 and 5.7% in 2023.
34 15
◆ Due to the rather disparate nature of the property
32
10 types within the REIT industry, it isn’t easy to
30
5
characterize revenue trends at the aggregate
28 level. For most REITs, rental income is the largest
0
26
source of revenue growth, which we see staying
-5 strong in 2022 as the post-pandemic recovery
24
continues.
22 -10
◆ The Covid-19 pandemic has particularly hurt
20 -15
2014 2015 2016 2017 2018 2019 2020 2021 2022* 2023* Office and Hotel REITs. The former is very
sensitive to the general economy, employment,
Total Revenue (left scale) Revenue Growth (right scale)
*Estimated.
and episodic events like the coronavirus, while the
Source: CFRA, S&P Global Market Intelligence. latter was further hampered by travel restrictions
put in place because of the pandemic. Each is
likely to face headwinds from new hybrid or work
from home trends as demand for office space
declines while business travel is unlikely to reach
pre-Covid-19 levels, in our view.

Real Estate Investment Growth

(in percent)
◆ Real estate investment suffered in 2020 as REITs
10
scaled back, delayed, or even canceled new
9
projects. As such, a higher growth rate of 9.5% was
8
observed in 2021 due to a low base. We believe
7
real estate investment is likely to pick up in 2022 as
6
investors look to real estate as a potential inflation
5
hedge.
4

3 ◆ Through the first half of 2022, demand continued

2 to absorb new warehouse capacity for industrials,
1 which we think will continue. Supply chain issues
0 have also slowed new supply growth in self-
2015 2016 2017 2018 2019 2020 2021
storage, potentially prolonging favorable
Note: Consituents include REITs in Dow Jones's coverage universe - i.e.,
companies listed in NYSE, NYSE MKT, NASDAQ, and OTC.
supply/demand dynamics. Hotels and offices may
Source: CFRA, S&P Global Market Intelligence. experience oversupply in urban markets as
demand changes structurally.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 6

Funds from Operations (FFO)
(in percent)
◆ FFO as a percentage of total revenue recovered to
43 20
41
39.5% in 2021 from 35.2% in 2020, largely driven
15
39 by residential, retail, and industrial REITs.
37 10
35 ◆ FFO grew 16.2% in 2021 compared with a decline
5
33 of 6.9% in 2020, largely due to increased economic
31 0
29
activities led by rising vaccination rates and Covid-
-5
27 19 related stimulus measures.
25 -10
2015 2016 2017 2018 2019 2020 2021 ◆ For 2022, CFRA sees FFO growth moderating
Funds-From-Operations-To-Total Revenue (left scale) from 2021 levels but remaining above the historical
Funds-From-Operations Growth (right scale)
average as the post-pandemic recovery continues
Note: Consituents include REITs in Dow Jones's coverage universe - i.e.,
companies listed in NYSE, NYSE MKT, NASDAQ, and OTC. and revenues rebound. Sustained real estate
Source: CFRA, S&P Global Market Intelligence.
investment could also steady FFO growth over the
coming years.

Recurring EBITDA/Interest Expense

(in SNL's coverage universe, all publicly traded companies*, in multiples)
◆ The Dow Jones Equity All REIT Index recurring
5.0
EBITDA-to-interest expense ratio surged to 4.7x
4.5 in 2021 from 3.8x in 2020.
4.0
◆ CFRA attributed this to the increase in recurring
3.5
EBITDA and the decline in interest expense,
3.0 which was lowered due to debt refinancing at
2.5 lower interest rates and, to a lesser degree, debt
2.0 retirements.
2015 2016 2017 2018 2019 2020 2021
◆ In 2022, we see continued, albeit a more tapered,
Note: Consituents include REITs in Dow Jones's coverage universe - i.e.,
companies listed in NYSE, NYSE MKT, NASDAQ, and OTC. recovery in EBITDA for most property types
Source: CFRA, S&P Global Market Intelligence.
driven by an economic recovery, particularly in
hotels and retail.

REIT Dividend Yield VS. Treasury Yield

(monthly, in percent) ◆ As of August 10, 2022, the Dow Jones Equity All
6.0
REIT Index dividend yield was 3.3%, representing
5.0 a positive spread of 49 basis points (bps) over the
4.0 10-year Treasury note yield of 2.8%.
3.0
◆ The two indices experienced the widest spread in
2.0
March 2020 at 457 bps during the height of the
1.0 pandemic. In April 2022, amid rapid rate hikes,
0.0 the spread was at its narrowest with just 9 bps.
2015 2016 2017 2018 2019 2020 2021 2022*
Dow Jones Equity All REIT ◆ The average and median yield spread between
10-Year U.S. Treasury Yield
REITs and the 10-year Treasury since 2015 was
*Data through August 10.
Note: Consituents include REITs in Dow Jones's coverage universe - i.e., 219 bps and 229 bps, respectively. This suggests
companies listed in NYSE, NYSE MKT, NASDAQ, and OTC.
Source: CFRA, S&P Global Market Intelligence, Federal Reserve. REITs are currently attractively priced, but this
could change if Treasury yields continue to rise.

7 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

Price-to-FFO
(in multiples) ◆ Price-to-FFO (P/FFO) multiple recovered rapidly
26
from the global pandemic, reaching a historic high
24 of 23.6x in June 2022. However, multiples have
22 begun to compress significantly since then as
20 rising rates and inflation fears have led to equity
18 market turmoil. As of August 10, 2022, despite
16 remaining above their long-run average, P/FFO
14
multiples have retracted to 17.6x.
12 ◆ We think price-to-FFO ratios will largely remain
2015 2016 2017 2018 2019 2020 2021 2022*
stable through 2022 as inflation fears push more
Price to Funds From Operations
Period Average
investors into real estate, often viewed as a hedge
*Data through August 10.
against inflation. REITs still offer a more attractive
Note: Consituents include REITs in Dow Jones's coverage universe - i.e.,
companies listed in NYSE, NYSE MKT, NASDAQ, and OTC.
dividend yield than the S&P 500, potentially
Source: CFRA, S&P Global Market Intelligence. justifying higher P/FFO ratios amid an uncertain
market environment.

Price-to-NAV
(in percent, monthly average) ◆ Price recovered to a high of 104.2% NAV in April
120 2022 from the nadir of 68.0% in April 2020. The
110 price/NAV figure stood at 97.3% as of August 10,
100 2022, amid a slight pullback in the second half of
90
the year. Despite that, prices still stand above
the average of 89.3% of NAV since 2019.
80

70 ◆ We see price-to-NAV stabilizing as REITs that

60 were liquidated during the March 2020 panic
2015 2016 2017 2018 2019 2020 2021 2022* recover and as analysts adjust NAV estimates to
Price to Net Asset Value Period Average reflect the new environment and cap rates.
*Data through August 10.
Note: Consituents include REITs in Dow Jones's coverage universe - i.e.,
companies listed in NYSE, NYSE MKT, NASDAQ, and OTC.
Source: CFRA, S&P Global Market Intelligence.

Variable-Rate Debt/Total Debt

(in percent)
◆ Variable-rate debt as a percentage of total debt
25
declined to 12.8% in 2021 from 13.5% in 2020 as
20 REITs continue taking advantage of an
accommodative monetary policy.
15

◆ As the Fed continues hiking interest rates and

10
letting assets run off the balance sheet, it remains
5 to be seen if REITs have sufficiently positioned
themselves during this favorable time to weather a
0
2015 2016 2017 2018 2019 2020 2021 less accommodative environment.
Note: Consituents include REITs in Dow Jones's coverage universe - i.e.,
companies listed in NYSE, NYSE MKT, NASDAQ, and OTC. ◆ That said, CFRA believes REITs are well
Source: CFRA, S&P Global Market Intelligence.
positioned for the current operating environment,
with many REITs having stronger balance sheets
now than they did pre-pandemic.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 8

KEY INDUSTRY DRIVERS

Capitalization Rates
(in percent, quarterly) ◆ REIT cap rates declined across the board in Q1
10.0
9.0 2022 from year-end 2021 levels. The 10-year
8.0 Treasury yield, on the other hand, trends higher
7.0
6.0 after falling substantially from Q2 2020 through Q4
5.0
4.0
2020.
3.0
2.0 ◆ This suggests that property valuations are relatively
1.0
0.0
expensive and raises concerns about how prices
might react when interest rates rise.
Apartment
Industrial
Office
Retail
◆ However, as Treasury yields have inched higher
Total 10-year Treasury yield
recently, we think cap rates could start rising to
*Data through Q1.
Source: Mortgage Bankers Association, Federal Reserve. compensate investors adequately.

Housing Starts
(seasonally adjusted annual rate, in thousands) ◆ U.S. privately-owned housing starts were at a
1,500 seasonally adjusted annual rate (SAAR) of 1.43
1,250 million units in July 2022, down 8.5% Y/Y.
1,000 ◆ Total existing-home sales in July 2022 slipped
750
20.2% Y/Y to a SAAR of 4.81 million units,
extending the sales decline for the sixth month.
500
According to NAR, this reflects the impact of the
250 peak mortgage rate of 6% in June.
0
2008 2010 2012 2014 2016 2018 2020 2022*
◆ We attribute such a decline to soaring house
Single-family Multiunit
prices and higher mortgage rates, which works to
*Data as of July.
cool overheating demand. We forecast existing
Source: U.S. Department of Commerce. home sales to remain subdued into 2023 barring
a significant retreat of mortgage rates to well
below 5%.

Retail & Food Service Sales vs. E-commerce Retail Sales Growth
(Y/Y growth rate, in percent) ◆ Brick-and-mortar sales rebounded strongly
60 immediately after lockdown relaxation. However,
50 such increases were a result of a pent-up demand
40 and unsustainable. In Q2 2022, retail sales grew
30 10.8%, down from a high of 29.7% in Q2 2021.
20
◆ Conversely, e-commerce retail sales—a significant
10
driver of industrial property demand—surged
0
52.7% Y/Y in Q2 2020. However, as more people
-10
are allowed out of their homes, its growth started to
-20
2008 2010 2012 2014 2016 2018 2020 2022* taper (just 6.8% Y/Y growth in Q2 2022).
Retail and Food Service Sales ◆ In the longer term, we see a continued secular shift
E-Commerce Retail Sales
to online shopping as both the ease and speed of
*Data through Q2.
Source: U.S. Census Bureau. online shopping continue to improve, which will
likely hurt retailers for many years to come.

9 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

INDUSTRY TRENDS

Through August 26, 2022, stocks in the real estate sector were down 17.9%, performing worse than the
S&P Composite 1500 index’s loss of 14.7%. This follows a 38.0% gain in 2021, a 8.5% decline in 2020, a
10.8% gain in 2019, and a 4.2% decline in 2018 for real estate stocks.

REITS INDEX PERFORMANCE BY TYPE

(percent)
250

200

150

100

50

(50)

(100)
2015 2016 2017 2018 2019 2020 2021 2022*

Total Equity Health Care Hotel Industrial

Diversified/Other Office Retail Regional Mall
Strip Ctr Residential Apartment Manufactured Homes
Self-storage
*Data through August 10.
Source: CFRA, S&P Global Market Intelligence.

Despite a dismal 2020, the REIT industry regained much of its footing in 2021 as economic activities
resumed and stay-at-home restrictions were largely relaxed. However, REIT performance alongside the
general economy took a turn for the worst in 2022 amid economic uncertainties brought on by 40-year
high inflation due to substantial economic stimulus during the pandemic, supply chain issues, and the
Russia-Ukraine war. With both countries being major exporters of raw food and energy products, being at
war meant major disruption for importers that rely heavily on those goods. Such an effect sent ripples
across the globe, most notably with increased food and gas prices, sending inflation rates through the
roof.

That said, we believe most negatives have been priced in at current market valuation, enabling REIT
share prices to recover in 2023 barring further escalation of the Russia-Ukraine conflict, a significant
global recession, or other disruptions to the return of normal economic activities around the globe from
Covid-19 lockdowns of previous years. Other major risk factors include uncertainties surrounding new
Covid-19 (or disease – i.e., Monkeypox) variants and the effects of increased interest rates.

While REIT fundamentals ultimately benefit from a strong economy, consumer spending, and job growth,
we think this could be somewhat offset by the relative attractiveness of shares of REITs. The low but
increasing interest rates make dividend-paying REITs more attractive, while unprecedented actions by
the Treasury and money creation by the Federal Reserve make ownership of “hard assets” like real
estate more appealing to investors worried about inflationary pressures currently in play. REITs generally

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 10

outperform on a relative basis in moderate inflation periods, given most rental contracts with REITs are
automatically adjusted upward for inflation, and the underlying assets of land and buildings do not
depreciate but appreciate along with inflation.

REITS VS S&P 500 INDEX

(cumulative total return from December 1999, in percent)
700

600

500

400

300

200

100

-100

All REITs S&P 500

*Data through July.
Source: NAREIT, CFRA, S&P Global Market Intelligence.

Year-to-date (YTD) through July 2022, a total of 70 U.S. REITs announced dividend increases, or
approximately 42% of the total U.S. REIT industry. This is slightly down from the 88 dividend increases
announced in 2021 but contrasts the 44 companies forced to cut dividends during the pandemic year.
However, the good news is not spread equally across all property types. Property types that constituted
the largest increase in dividends include retail (with 15 YTD hikes – nine of which were shopping centers),
residential (14 hikes), and specialty (12 hikes – consisting of data center, energy infrastructure, casino,
advertising, timber, communications, land, and cineplex REITs). On the other hand, hotel and resort
REITs were the lowest with only one dividend increase. Since the pandemic, hotel and resort REITs
suspended dividend payments and drew down their credit facilities to preserve cash. Even with lockdown
restrictions being lifted in many areas, most hotel properties are still operating at very low levels. In July
2022, STR reported that occupancy rates averaged 69.6% for hotels in the U.S., while the average daily
rate and revenue per available room stood at $159.08 and $110.73, respectively.

As of August 10, 2022, the Dow Jones Equity All REIT Index dividend yield was 3.3%, representing a
positive spread of 49 basis points (bps) over the 10-year Treasury note yield of 2.8%. U.S. REIT yields
reached a post-pandemic high of 3.6% in June 2022 before sliding amid economic concerns. This is
compared to the 4.4% average yield in pre-pandemic 2019. The average yield spread between the Dow
Jones U.S. REIT index and the 10-year Treasury from 2015 to 2019 was approximately 230 bps (or 2.3
percentage points). Therefore, we see REITs as slightly undervalued on this measure.

11 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 DOW JONES EQUITY ALL REIT INDEX YIELD VS 10-YEAR TREASURY YIELD
(monthly, in percent)
6.0

5.0

4.0

3.0

2.0

1.0

0.0
2015 2016 2017 2018 2019 2020 2021 2022*

Dow Jones Equity All REIT 10-Year U.S. Treasury Yield

*Data for All REIT index through June 30; 10-year Treasury through August 10.
Source: CFRA, S&P Global Market Intelligence, Federal Reserve.

In addition, to combat unruly inflation, the Federal Reserve had raised interest rates for the first time since
the onset of the pandemic in March 2022. Since then, there were three instances of rate hikes, taking the
latest benchmark rate to a range of 2.25%-2.50%. For the last 12 months ended July 2022, consumer
prices were up 8.5%. While still high, the figure represents a significant drop from 40-year high 9.1%
recorded in June. Rising interest rates alone are viewed as a headwind for REITs, as by themselves they
are likely to lead to increased borrowing costs. REITs are often considered more sensitive to higher
borrowing costs than other industries, as they are heavily financed by debt, at-the-market (ATM) equity,
property dispositions to fund new developments, and mergers and acquisitions (M&A). This is largely a
result of REITs being required to distribute at least 90% of taxable income to shareholders annually in the
form of dividends, prohibiting REITs from utilizing a significant portion of their retained earnings for
business investment. Rising borrowing costs may further lead to depressed property values and even
properties trading at a discount to net asset value (NAV).

DOW JONES PROPERTY FOCUS INDICES DIVIDEND YIELD

(in percent, as of August 10, 2022)
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

Source: CFRA, S&P Global Market Intelligence.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 12

However, according to the National Association of Real Estate Investment Trusts (NAREIT), higher
interest rates driven by economic growth are generally beneficial for REITs as they support revenue
growth. A stronger economy would typically lead to lower vacancy rates, higher rent growth, and
subsequently increased funds from operation and net operating income. This, in turn, increases property
prices and provides investors with higher dividend payments. Furthermore, REITs are often considered
strong inflation hedges because rents are not considered as “sticky” as other prices. Long-term leases will
generally have inflation protection built into the rental contract, and short-term leases are likely to reflect
current market prices. Additionally, REITs generally enjoy portfolio appreciation as the underlying real
assets (buildings or land) usually appreciate along with inflation. This can make the sector increasingly
attractive to some investors in the current high inflationary environment.

Operating Environment
U.S. Economic Forecast Update
Because the operating environment of the REIT industry is so closely aligned with the macroeconomic
environment, a review of the macroeconomic environment is helpful in assessing the REIT operating
environment. Despite the $1 trillion stimulus package and passing of the Inflation Reduction Act (also
known as the climate bill), the U.S. economy is still in a precarious position with increasing recessionary
fears. As such, real GDP is expected to grow only 1.7% this year, and 1.5% in 2023, according to
forecasts by Action Economics as of August 20, 2022.

The national unemployment rate currently stands at 3.5% in July 2022, on par with the pre-pandemic
figures and seemingly closer to the Fed’s “full employment” mandate. Job growth in July 2022 was
significantly higher than estimates despite higher interest rates and recessionary fears. There were
528,000 jobs created during the month, compared to economists’ expectation of only 250,000. Action
Economics forecasts the rate to remain 3.6% in 2022 and 2023.

However, we note unemployment tends to be a lagging indicator and can be a contrary indicator at
extreme lows and highs. Conversely, initial unemployment claims tend to be a leading indicator of
unemployment. Fortunately, this figure had also shown steady improvements since the start of the
pandemic. In the week ending August 18, 2022, only 250,000 people filed new claims for unemployment
benefits. The figure contrasts the 17 million new filings for the three weeks ending April 4, 2020, but
remained slightly above the four-week moving average of 246,750. Continuing unemployment claims
came off a record peak as well, standing at 1.4 million as of August 6, 2022 (versus 24.9 million at the
peak in May 2020).

In response to the Covid-19 outbreak, the Fed brought interest rates down to a range of 0.0% to 0.25%.
While most analysts (ourselves included) saw “lower for longer” as the default scenario for interest rates,
this all changed when the consumer price index (CPI) figure came in much higher than expected. CPI
figures reached 6.2% Y/Y in November 2021 before climbing to a 40-year high of 9.1% Y/Y in June 2022,
before inching lower to 8.5% Y/Y in July. This prompted the early termination of the Fed’s bond-buying
program and initiation of a multi-stage interest rate hike starting in March 2022.

REIT shares typically trade inversely to the 10-year Treasury yield, but the correlation appeared to have
broken during the height of the pandemic amid significant market fluctuations (see chart below). It wasn’t
until recently – in April 2021 – that the two resumed their inverse relationship. YTD through August 10,
2022, the 10-year yield gained 101 bps, while shares in the Dow Jones Equity All REIT Index rose by 44
bps.

13 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 10-YEAR TREASURY YIELD VS DOW JONES EQUITY ALL REIT PERFORMANCE
(monthly, in percent)
3.5 120

3.0 100

2.5 80

2.0 60

1.5 40

1.0 20

0.5 0

0.0 -20
2016 2017 2018 2019 2020 2021 2022*

10-Year U.S. Treasury Yield - end of period (left scale) Dow Jones Equity All REIT (right scale)

*Data as of August 10.

Source: CFRA, S&P Global Market Intelligence, Federal Reserve.

As shown in the table below, most U.S. REITs are moderately levered and have been reducing leverage
along with the previous rising rate environment. This somewhat reversed in 2020, with REITs issuing
more debt to secure liquidity while also experiencing declining EBITDA. However, debt issuance was
once again reversed in 2021 amid improving economic conditions and revenue performance.

DOW JONES EQUITY ALL REIT* INDEX FINANCIALS

------------------ FOR THE YEAR ENDED ----------------
2017 2018 2019 2020 2021
EBITDA/ Interest Expense (x) 4.45 4.50 4.64 3.99 5.27
Recurring EBITDA/ Interest Expense (x) 4.24 4.18 4.22 3.79 4.68
Short-term Debt/ Debt (%) 6.95 6.51 6.89 5.89 6.55
Variable-rate Debt/ Debt (%) 19.55 19.87 14.51 13.45 12.83
*Includes all publicly traded (NYSE, NYSE American, NASDAQ, OTC) Equity REITs in Dow Jones' coverage
universe.
Source: CFRA, S&P Global Market Intelligence.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 14

Review of Capitalization Rates History and Outlook
Historically, the investment performance of publicly-traded REITs followed a pattern that very much
mirrors the economy, the underlying job market, and the prevailing credit market conditions. The
combination of low interest rates and dynamic economic growth pumped investor dollars into U.S. REITs
from 2004 to early 2007. The steady flow of capital bred strong competition to buy a limited supply of
commercial property, pushing prices considerably higher. With property fundamentals lagging behind
price increases, capitalization rates (cap rates) – which measure a property’s initial yield or the return it
generates in the first year – were low. Cap rates then climbed in 2009 and 2010 as property prices
deflated but have since stabilized and trended downward in the subsequent years as property prices
increased, ending 2018 near or even below their lows a decade ago.

Cap rates today are low, but interest rates are even lower, despite recent hikes. The cap rate spread to
the 10-year Treasury yield – which measures the return above risk-free rates to property investors – has
widened from 3.1 percentage points (ppts) in the fourth quarter of 2018 to 5.4 ppts in the third quarter of
2020. Since then, we saw the narrowing of cap rate spread to 2.9 ppts as of the first quarter of 2022
(latest available) due to an increasing Treasury yield and decreasing cap rates.

We project capitalization rates for REITs will remain relatively low. We think institutional investors have
taken a greater interest in public REITs as a proxy for the commercial real estate market. REITs offer
investors a liquid investment vehicle to increase exposure to the real estate market, as well as the ability
to rotate between individual property groups quickly. Additionally, during periods of economic uncertainty,
REITs offer a consistent dividend component for investors who seek total return. We see cap rates rising
in the year ahead as investors demand higher compensation in a rising rate environment.

CAPITALIZATION RATES
(in percent, quarterly)
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2008 2010 2012 2014 2016 2018 2020 2022*

Total Apartment Industrial Office Retail 10-year Treasury yield

*Data through Q1.

Source: Mortgage Bankers Association, Federal Reserve.

15 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

Generally, a REIT’s planned growth through acquisitions is tied to raising new capital and asset
dispositions. The table below shows the capital raised by REITs in recent years.

CAPITAL RAISED BY U.S. REITS

($, in millions)

-------------------------SECONDARY EQUITY------------------------- SECONDARY DEBT

ATM
PERIOD IPO COMMON SHARES PREFERRED SHARES ISSUANCE† (UNSECURED) TOTAL
2015 1,423 23,433 2,236 3,534 32,201 62,827
2016 1,690 26,158 4,655 7,707 37,261 77,471
2017 2,950 27,875 10,970 8,379 50,767 100,941
2018 3,264 16,654 1,580 8,913 25,222 55,633
2019 220 31,995 4,454 13,134 63,146 112,949
2020 899 17,793 3,190 11,123 73,099 106,104
2021 837 32,708 5,626 21,800 72,620 133,591
2022* 0 12,277 545 5,180 10,143 28,145
*Data through May. †ATM issuance data available on a quarterly basis.
Source: NAREIT, CFRA, S&P Global Market Intelligence.

Risks to increased real estate transactions are tied to buyers and sellers not agreeing on the fair value,
REITs’ hesitancy to dispose of key properties, reduced fundraising by private equity firms, a slow-growth
economy that ends in recession, less access to the credit markets, and reduced investor confidence. A
capital-market slowdown and uncertainty over property-level cash flow will likely mean fewer interested
buyers. In addition, lenders may increasingly get nervous, which will add to the transaction freeze. That
said, we do not foresee such an event happening in the short term.

NCREIF PROPERTY INDEX RETURNS

(quarter-to-quarter total return on investment, in percent)
15

10

(5)

(10)

(15)

(20)
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022*

Hotel Apartment Retail Industrial Office

*Data through Q2.

Source: National Council of Real Estate Investment Fiduciaries.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 16

Competitive Environment
Porter’s Five Forces Analysis
The competitive forces within the REIT industry can vary significantly by property type. We analyze
Porter’s five forces by property type in the table below:

PORTER'S FIVE FORCES ANALYSIS BY REIT PROPERTY TYPE

PROPERTY THREAT OF ENTRY POWER OF POWER OF BUYERS THREAT OF RIVALRY AMONG

TYPE SUPPLIERS SUBSTITUTES EXISTING
COMPETITORS
MEDIUM - Very LOW - Most suppliers HIGH - Tenants usually MEDIUM - While the HIGH - Rivalry
location dependent as are fragmented, have ample options demand for quality among many
the threat of entry to including suppliers of when choosing office office space will competitors remains
suburban office land, labor, and raw space, even within the remain, various intense as most
locations is high while materials. However, same geographic area. substitutes have office space tends to
more barriers to entry suppliers are beholden Further, office curtailed the total be commoditized and
exist in central to economic cycles properties have one of demand for office since the landlord
business districts where they can the highest capital space. We think this usually provides a
(CBD) due to land demand higher prices expenditure rates could accelerate an tenant improvement
scarcity as well as during boom phases among property types already established allowance, tenants
zoning and entitlement but must accept lower due to both the high trend as businesses can customize the
OFFICE issues. prices in cyclical capex needed to change processes to space to fit their
downturns. Scarcity of maintain the buildings hire the best talent at needs. Most office
skilled labor is a risk to as well as the capex for the best price, developers desire to
office REITs. tenant improvements regardless of pre-lease a
(TI) and build-out. In geography and need significant
today's knowledge for a centralized percentage of
economy, many office or any office at occupancy during
companies are asset- all. development, to
lite or intellectual- qualify for better
heavy, meaning terms on construction
moving offices has low loans.
switching costs.

HIGH - Competitors LOW - Most suppliers HIGH - Tenants usually HIGH - Potential HIGH - Not only are
can easily enter the are fragmented, have ample options multi-family tenants there a wide variety
market as long as they including suppliers of when choosing an have options of of well-capitalized
can acquire land and land, labor, and raw apartment, even within renting single-family multi-family
access capital markets. materials. However, the same small area for homes, buying a operators, but there
Some operators may suppliers are beholden large cities. Price residential unit or is also a large
have moderate barriers to economic cycles comparison is easy house, or even amount of "mom-
to entry in dense urban where they can and potential tenants moving in with and-pop" landlords
areas where land is demand higher prices can play landlords friends or family or that rent out
scarce and zoning or during boom phases against each other. finding a sub-lease. individual condo
entitlements can but must accept lower Leases are usually Affordability of home units, homes, rooms,
prevent new prices in cyclical short term at one year. ownership is a threat, etc. Although multi-
development, as in the downturns. However, due to higher even with low family has benefited
Seattle and California switching costs and mortgage rates from a shift to more
markets. Specialized inconvenience of average home selling renters after the
MULTI- multi-family, like moving, buyer power is prices have housing crisis,
FAMILY student housing or somewhat diminished continued to competition remains
manufactured housing and higher prices can increase. high and large
communities, may have be passed to current operators may find
higher barriers to entry tenants more easily. they need to lower
and are more Power of buyers may rents dramatically to
recession-resistant vary between Class A keep their preferred
properties. and Class B properties, 95% occupancy
or at different stages of levels. Multi-family
the economic cycle. REITs are either
concentrated in
coastal markets,
often in urban
markets or have a
large footprint in Sun
Belt markets.

17 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 PROPERTY THREAT OF ENTRY POWER OF POWER OF BUYERS THREAT OF RIVALRY AMONG
TYPE SUPPLIERS SUBSTITUTES EXISTING
COMPETITORS
HIGH - Competitors LOW - Most suppliers HIGH - Tenants of HIGH - Previously, HIGH - Retail REIT
can easily enter the are fragmented, retail spaces usually many retailers operators not only
market as long as they including suppliers of have a myriad of needed physical compete against
can acquire land and land, labor, and raw options when deciding locations to other well-capitalized
access capital markets. materials. However, where to rent as retail showcase and sell publicly traded REITs
Some operators may suppliers are beholden spaces are their products. but also against a
have moderate barriers to economic cycles standardized/not However, many myriad of small
to entry in dense urban where they can differentiated and brands have now operators that may
areas where land is demand higher prices tenants can play demonstrated they be owned by
scarce, and zoning or during boom phases landlords against each can be "digitally individuals, families,
RETAIL entitlements can but must accept lower other. Tenants acting native" and ship private equity firms,
prevent new prices in cyclical as a large group (such direct to the etc. Price signals are
development. downturns.. as a large retail chain) consumer, removing readily visible to all
can have even more the need for physical competitors and high
bargaining power. stores. Covid-19 has exit costs keep
demonstrated even operators in the
more retail shopping market as well as
can be done online capacity high, leading
than previously to low or even
estimated. negative returns.
MEDIUM - Competitors MEDIUM - Suppliers of MEDIUM - When LOW - Senior MEDIUM - Medical
can enter the market land and material are choosing a location, housing facilities, REITs compete
with relative ease, fragmented and some geographic skilled nursing against a variety of
although some commoditized, but constraints may include facilities, life science publicly traded REITs
specialized buildouts labor needed to proximity to hospitals companies, and as well as other
and zoning may operate various and areas where especially hospitals smaller and
impede entry. medical facilities can demographics are need specialized independent
be specialized. favorable (i.e., an properties and the operators. However,
ageing population). correct zoning. average lease length
HEALTH Further, most medical However, medical of 10-15 years gives
CARE tenants are under a office buildings can some stability and
triple-net lease, require a more relieves competitor
whereby they are commoditized pressure.
responsible for all product.
property operating
expenses, and
switching costs can be
high for specialized
facilities.

MEDIUM - This is very LOW - Most suppliers HIGH - Tenants of MEDIUM - Business HIGH - Hotel
location dependent as are fragmented, hotel rooms have travelers or large operators face
the threat of entry to including suppliers of incredible choices with groups must usually intense competition
suburban and middle- land, labor, and raw multiple hotels often in use or contract with against other efficient
tier lodging is high but materials. However, the same geographic large hotel chains for and well-capitalized
first-tier and "trophy" suppliers are beholden area. Technology, such their needs. peers. Prices are
property locations in to economic cycles as travel search However, individuals readily visible to all
major cities or prime where they can engines, makes price and leisure travelers participants and can
waterfront locations are demand higher prices comparison easy, and have an increasingly be changed daily,
in very short supply. during boom phases given the lease term is expanding choice forcing competitors to
but must accept lower essentially one- given the rise of react instantaneously
LODGING prices in cyclical day/night, operators services such as so as to not lose
downturns. are subject to pricing Airbnb and vacation share. Given
and occupancy risks. rentals. Covid-19 has consolidation, the
demonstrated to large hotel operators
companies that much are roughly equal in
of their previous terms of power and
business travel and must fight for market
conferences were share.
unnecessary or not a
good return on
investment.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 18

 PROPERTY THREAT OF ENTRY POWER OF POWER OF BUYERS THREAT OF RIVALRY AMONG
TYPE SUPPLIERS SUBSTITUTES EXISTING
COMPETITORS
HIGH - Self-storage LOW - Most suppliers MEDIUM - Self-storage HIGH - Tenants can HIGH - Self-storage
units can usually be are fragmented tenants have relatively choose to store more REIT operators
built cheaply and including suppliers of high bargaining power of their contents in compete against
quickly with a much land, labor, and raw when looking to rent a their homes or other publicly traded,
lower capital materials. However, unit as the product is businesses or reduce well-capitalized, and
investment compared many self-storage commoditized and the number of items sophisticated
to other property types. operators have noted tenants can play they have to lower or operators as well as
As such, the industry pricing increases in operators off each eliminate the need a very large market
can quickly swing from labor (both other. However, for self-storage. of "mom-and-pop"
balanced economics to construction and individuals are very operators given the
situations of a supply operations). fragmented and once low barriers to entry
SELF- glut leading to pricing they rent a unit, they in the market. These
STORAGE pressures and margin face a higher switching smaller operators can
compression. cost of having to take sometimes cause
the time and energy to excess inventory and
move their contents. a supply glut, forcing
Therefore, price operators to cut
increases to existing prices. Price signals
tenants are much are readily visible to
easier for operators to all competitors and
pass along. high exit costs lead to
regularly recurring
supply/demand
imbalances.
MEDIUM - Previously, MEDIUM - Logistics LOW - Buyers are LOW - Tenants have MEDIUM - Industrial
this force was high as providers have noted currently very price few other options REIT operators
industrial and logistics labor costs are rising, insensitive as the when it comes to compete against
facilities could be built both for construction logistics/warehouse warehousing and other publicly traded
quickly and easily as and operating facilities. rental cost is typically a logistics centers. REITs as well as
land outside of cities Specifically, it is very small portion of Small operators against a myriad of
was plentiful. However, becoming harder to their total logistics sometimes turn to small operators that
demand has shifted to find qualified labor to costs (usually around self-storage units (of may be owned by
logistics facilities in city operate logistics 5%) and have therefore which some individuals, families,
centers and near very machinery like forklifts, readily been absorbing specialize in this private equity firms,
land constrained areas etc. We also note that 10%+ rent increases. It area) or third-party etc. Price signals are
INDUSTRIAL close to ports and the recent coronavirus is more important for logistics providers. A readily visible to all
logistics hubs to get has increased supplier e-commerce large retailer (i.e., competitors and high
products to consumers bargaining power as companies to have Amazon) could exit costs keep
in less time. Zoning e-commerce has prime locations than integrate logistics operators in the
restrictions in and accelerated, increasing slightly lower costs. and warehousing into market and capacity
around city centers industrial REIT its own value chain, high, leading to low
further restrict demand. but they would still or even negative
availability of industrial face the same returns. However, as
space in prime market supply the market is still
markets. constraints. currently expanding,
rivalry pressures are
subdued.

Sources: CFRA, company reports.

19 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

We look at the competitive environment of REITs by property type in the next section:

Residential REITs
Residential REITs own and manage various forms of residences and rent space in those properties to
tenants. Residential REITs include REITs specializing in apartment buildings, student housing,
manufactured homes, and single-family homes. Within those market segments, some residential REITs
also focus on specific geographical markets or classes of properties.

YTD through August 30, 2022, the Dow Jones U.S. Real Estate Residential Index was down 20.3%
versus S&P Composite 1500 Index’s decline of 15.9%. In comparison, the price performance for
residential REITs was up 59.9% in 2021 versus the S&P Composite 1500 Index’s gain of 28.5%. As of
August 17, 2022, S&P Global Market Intelligence indicated residential REITs traded at 2.9x P/B and have
a TEV/Unlevered FCF of 26.8x compared to U.S. equity REITs trading at a 2.8x P/B and 20.6x
TEV/Unlevered FCF multiple.

U.S. RESIDENTIAL REIT EBITDA-TO-INTEREST EXPENSE

(in multiples)
6.5

6.0

5.5

5.0

4.5

4.0

3.5
2017 2018 2019 2020 2021
EBITDA-to-interest expense Recurring EBITDA-to-interest expense

Source: CFRA, S&P Global Market Intelligence.

U.S. RESIDENTIAL REIT FUNDS FROM OPERATIONS & REAL ESTATE INVESTMENT
(in percent)

14 43
12
10 42
8 41
6
4 40
2
0 39
-2 38
-4
-6 37
2017 2018 2019 2020 2021

Real estate investment growth

Funds from operations growth
Funds from operations-to-total revenue (right scale)

Source: CFRA, S&P Global Market Intelligence.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 20

We have a positive fundamental outlook for the Residential REITs, as we think multifamily properties are
seeing strong gains in tenant demand that will lead to higher rental rates in 2022. We see Covid-19 as a
rear-mirror risk to further disruptions in monthly rent collections, especially as most tenants are back at
work, albeit mostly remote. We think rental rates will trend high single-digit Y/Y in most markets, with
coastal markets and high-demand Sunbelt markets experiencing double-digit rate increases for new
leases. The total new supply coming into the residential real estate market will likely be moderate in 2022,
especially in dense urban markets.

RENTAL VACANCIES vs HOME OWNERSHIP RATES

(in percent)
Total Households Total Rental Properties
72 12

70 11

10
68
9
66
8
64
7
62 6

60 5

Home ownership (left scale) Rental vacancies (right scale)

*Data through Q2.

Source: U.S. Census Bureau.

Top of mind are the housing shortage and affordability for home ownership that make multifamily rental
properties attractive, in our view. Most parts of the country are seeing 15%-20% Y/Y increases in new
lease rates, while renewal rates have been 8%-12% higher from our observations of the largest metro
markets. Residential REITs are likely to be optimistic for Q2 2022, as the pandemic is less disruptive to
rental revenue, net operating income, and occupancy levels. We think residential REITs may launch
select property developments and will complete developments in progress.

We think demand for rental units may exceed pre-pandemic levels in 2022, given U.S. housing shortage
and affordability with record average home selling prices. The pendulum for rent versus buy is moving
back strongly in favor of rental properties, as affordability and availability make owning a home extremely
expensive today.

Looking ahead to 2022, rental renewal and new lease rates are likely to recover as property owners are
less concerned about tenant turnover during strengthening economic conditions. New leases in many
markets have already removed one to two free months, and rental rates are moving well above pre-
pandemic levels in most urban markets. We note urban and suburban apartments are in high demand.

Affordability may be an issue with select Class A properties in coastal markets that ask for high rental
rates. In the Sun Belt markets, we see more stability in Class B properties that are older apartment
complexes, but high-priced Class A new apartments have solid leasing. We think residential REITs with

21 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

high concentrations of properties in Boston, Los Angeles, New York, and Washington D.C. have fully
recovered, with young residents coming into the workforce.

We are positive on leisure rentals of manufactured mobile homes in Sun Belt markets that benefit from
baby boomers retiring in large numbers. These homesite communities target retirees from middle-class
households, who are a more stable category, and that are not dependent on job employment.
Vaccinations are opening up these rental communities.

Another promising area is single-family rental homes that take advantage of families seeking a new
lifestyle in the suburbs. Recently, investors were 33% of February existing home sales. Private equity
firms and other institutions are increasing their investments in single-family home rental real estate. The
property developers target attractive neighborhoods at in-fill locations with demand attributes, such as
proximity to desirable schools.

Apartment Supply Rebounding from Covid-19 Setback

After several years of depressed construction activity and an acute decline in 2020 due to Covid-19, data
from the U.S. Census Bureau suggests that both construction starts and newly issued permits on new
multi-family units have returned to more “normal” levels. In June 2022, new multi-family construction
starts reached a post-pandemic high of 568,000 units, more than doubling its low in April 2020. The new
multi-family units under construction stood at 846,000 as of July 2022, up 0.8% from the previous month
and 27.4% from April 2020.

SINGLE-FAMILY VS. MULTIUNIT HOUSING STARTS

(seasonally adjusted annual rate, in thousands)
2,000

1,750

1,500

1,250

1,000

750

500

250

Single-family Multiunit

*Data through July.

Source: U.S. Department of Commerce.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 22

Retail REITs
Retail REITs own and manage retail real estate and rent space in those properties to tenants. Retail
REITs include REITs that focus on large regional malls, outlet centers, grocery-anchored shopping
centers, and power centers that feature big-box retailers. Net lease REITs own freestanding properties
and structure their leases so that tenants pay both rent and most operating expenses for a property.

U.S. RETAIL REIT EBITDA-TO-INTEREST EXPENSE

(in multiples)
4.8
4.6
4.4
4.2
4.0
3.8
3.6
3.4
3.2
3.0
2017 2018 2019 2020 2021

EBITDA-to-interest expense Recurring EBITDA-to-interest expense

Source: CFRA, S&P Global Market Intelligence.

U.S. RETAIL REIT FUNDS FROM OPERATIONS & REAL ESTATE INVESTMENT
(in percent)
30 54
53
20
52
10
51
0 50
49
-10
48
-20
47
-30 46
2017 2018 2019 2020 2021

Real estate investment growth

Funds from operations growth

Source: CFRA, S&P Global Market Intelligence.

23 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

Store Openings Outpace Closures but Clouds Form on the Horizon
While Retail REITs underperformed the broad equity markets in 2020, the reverse was true in 2021. The
Dow Jones U.S. Real Estate Retail Index spiked 55.9%, compared to the S&P Composite 1500 Index’s
gain of 28.5%. Investors scooped up retail REITs on positive vaccine rollout news, as well as the
reopening of many areas and the lifting of restrictions on indoor shopping and dining. With consumer
spending elevated, GDP forecasted to remain strong, and interest rates near historic lows, 2022 looked
like it would be a continuation of the positive recovery seen in 2021. However, another reversal in share
performance has occurred through the first half of 2022 as soaring inflation, rapidly rising interest rates,
and growing fears of a recession over the next 6 to 12 months have pushed investors away from this
sector. Year-to-date (YTD) through August 30, 2022, the Dow Jones U.S. Real Estate Retail Index was
down 15.9% compared to the S&P Composite 1500 index down 15.3%.

In 2021, store openings outpaced closures for the first time since 2016. Data published by Coresight
Research showed that 5,083 store openings were announced by major retailers in 2021, compared to
5,079 closures during the same period. This trend has continued into 2022, with a net positive 3,765 store
openings projected through the first quarter, according to Daily on Retail, as retailers took advantage of
the strong U.S. consumer and a favorable funding environment. However, signs of a retail slowdown may
be beginning to emerge. After retail sales rose a staggering 75.0% in 2021 off of April 2020 lows,
according to the U.S. Census Bureau, retail sales declined 0.3% month-over-month in May 2022, the first
decline in five months. This slowdown in spending is likely a result of high inflation and recession fears
that are beginning to eat away at consumers’ spending power; at the same time, excess pandemic-
related savings are being spent down. If the U.S. economy begins to meaningfully slow in the second half
of the year, we expect that many retailers who have been focused on expanding their retail presence
coming out of the pandemic may be forced to reconsider plans or even close some recently opened
locations.

Digitally Native Brands Starting to See Importance of Physical Footprint

While we acknowledge the secular shift to online shopping continues to hurt retailers, we also think
changing consumer tastes and shopping habits are just as strong of a driver as various brands and stores
go out of style. Nevertheless, we have observed retailers beginning to pivot back toward brick-and-mortar
stores to improve their brand. Some realized that a good retail location could attract customers at a lower
acquisition cost than online channels amid a saturated online ad environment. We note that various
brands that started as “native online” or online-only are now beginning to expand with brick-and-mortar
retail locations in shopping malls and strip centers. Amazon is one such example. In 2022, the online
retailer plans to set up a 30,000 square feet clothing store at the Americana at Brand mall in yet another
brick-and-mortar entry for the company. Doing so would not only allow Amazon to enhance its physical
presence, but it’d also allow the company to gain more data and insight on real-time shoppers.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 24

Retail REITs – Enclosed Shopping Malls:
U.S. REGIONAL MALL REIT EBITDA-TO-INTEREST EXPENSE
(in multiples)
5.5

5.0

4.5

4.0

3.5

3.0

2.5

2.0
2017 2018 2019 2020 2021
EBITDA-to-interest expense Recurring EBITDA-to-interest expense

Source: CFRA, S&P Global Market Intelligence.

U.S. REGIONAL MALL REIT FUNDS FROM OPERATIONS & REAL ESTATE INVESTMENT
(in percent)
50 70
40 68
30 66
20
64
10
62
0
60
-10
-20 58
-30 56
-40 54
2017 2018 2019 2020 2021
Real estate investment growth
Funds from operations growth

Source: CFRA, S&P Global Market Intelligence.

Coronavirus Drove the Final Nail in the Coffin for Many Shopping Malls
Prior to the outbreak, enclosed shopping malls were already struggling for years. Weaker operators were
the first affected but soon spread to the “Class A” operators (see next section below). With the restrictions
in place to help stop the spread of the virus, virtually all shopping malls were ordered to close or partially
close, leaving their tenants with no choice but to close as well.

Many mall operators allowed tenants to defer a few more months’ rent, making it due sometime in mid to
late 2021. From an accounting perspective, REITs are required to put these tenants on a cash collection
basis if collectability is in doubt rather than continue to account for the full rent on an accrual basis.
Nevertheless, it was clear that mall operators faced a massive decline in rent revenue when cash flows
were already tight. However, shoppers have largely returned to malls, as evidenced by foot traffic

25 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

reaching or even surpassing 2019 levels, while unemployment remains below 4% and consumer
spending is high.

The year 2020 did see two publicly traded malls file for bankruptcy – CBL Properties and Pennsylvania
Real Estate Investment Trust. Both REITs have continued operations at their respective properties while
undergoing restructuring. In 2021, however, only Washington Prime Group filed for Chapter 11
bankruptcy protection. With rising interest rates and a potential recession looming over the next 6 to 12
months, many mall operators may find themselves tested again much sooner than they initially
anticipated.

Mall Occupancy Gap Widens as Uneven Recovery Continues

We previously viewed Class A mall REITs as more insulated against the string of retail bankruptcies and
store closures, given their prime real estate locations with better foot traffic and a more affluent population
in metropolitan areas. While we still believe higher-class malls will fare better on a relative basis than
lower-class peers, we have not seen additional mall bankruptcies in lower-class malls. However, B and C
malls that were already faltering before the pandemic saw a decline in performance at an accelerated
pace.

While most restrictions on retail businesses were lifted months prior, it wasn’t until the fourth quarter of
2021 that a greater sense of normalcy was felt as increased vaccination rates boosted the return of in-
person shopping. However, we think retailers will not benefit equally from the increased footfall. For
example, open-air centers, especially those with grocery stores as anchors, have outperformed since
2020 amid greater demand for space than their indoor counterparts due to fears of virus spread.

We still see malls facing increasing challenges as most of their tenants are still apparel retailers,
grappling with the rise of online shopping and changing consumer tastes. Additionally, we think many
major anchor tenants, such as J.C. Penney, Sears, and Macy’s, will continue shutting down stores. Mall
operators like to point out this is a good thing as anchors typically pay rent multiple times lower than their
other tenants, allowing mall operators to recapture this space and lease it to higher-paying tenants.
However, we note it is increasingly hard to find replacement tenants that desire as much space as a large
anchor. Further, for mall REITs to subdivide or reposition the space will require increasing capital
expenditures, putting pressure on cash flows.

VALUE OF SHOPPING MALL CONSTRUCTION

4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*
*Data as of June.
Source: U.S. Census Bureau.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 26

Retail REITs - Shopping Centers:
U.S. STRIP CENTER REIT EBITDA-TO-INTEREST EXPENSE
(in multiples)
4.8
4.6
4.4
4.2
4.0
3.8
3.6
3.4
3.2
3.0
2017 2018 2019 2020 2021

EBITDA-to-interest expense Recurring EBITDA-to-interest expense

Source: CFRA, S&P Global Market Intelligence.

U.S. STRIP CENTER REIT FUNDS FROM OPERATIONS & REAL ESTATE INVESTMENT
(in percent)
35 48
30
47
25
20 46
15 45
10
5 44
0 43
-5
42
-10
-15 41
2017 2018 2019 2020 2021

Real estate investment growth

Funds from operations growth
Funds from operations-to-total revenue (right scale)

Source: CFRA, S&P Global Market Intelligence.

27 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

Single Tenant and Grocery Anchored Expected to Fare Better
We expect grocery-anchored shopping centers and single-tenant REITs to perform better due to the
internet-resistant business model and focus on selling daily essentials. The post-pandemic recovery is set
to provide a springboard for retailers in this segment amid increasing consumer spending, limited
segment development, and overall economic recovery. According to commercial real estate service
company JLL Inc., mall foot traffic was only 3.1% below its April 2019 level, and CFRA expects this
number to continue improving through 2022.

Most single-tenant REITs have a triple net lease structure in which the tenant is solely responsible for all
of the costs relating to the property being leased (e.g., real estate taxes, building insurance, maintenance)
in addition to the rent. We see REITs with value-oriented tenants, such as off-price and discount retailers,
as faring better due to these tenants’ ability to compete on price more effectively against online retailers.

We also expect retail REITs with properties located in dense urban areas to perform relatively better due
to constraints in supply and a relatively more affluent customer base. However, even with prime real
estate locations, these REITs will need to increase capital expenditures to redevelop and reposition
properties to adapt to the shifting retailer trends. We see smaller store formats and a move to mixed-use
properties, including hotels, residential units, or offices key to long-term success amid changing
consumer tastes.

E-commerce Will Not Impact All Retail Tenants Equally

E-commerce continues to disrupt retail, but CFRA thinks the pace and risks are still underappreciated.
While it may appear from headlines that nearly all shopping is being done online today, only 14.5% of
total U.S. retail sales were conducted online in the first quarter of 2022, according to the U.S. Census
Bureau. This gives online retail sales an enormous opportunity to continue to capture retail dollars in our
view, with commercial real estate company Colliers estimating e-commerce will account for up to 23% of
total retail sales by 2025.

E-commerce activity surged in 2020 when most of the world was confined to their own homes. This led to
a lower growth rate in 2021 (and a surge in conventional retail as stores reopen). Despite so, we still think
that e-commerce retail sales growth will continue to outpace total retail sales growth for the next five
years. However, different types of retailers (and therefore REIT tenants) will be affected by the shift to e-
commerce differently (see table on next page). Book retailers, for example, are the most vulnerable to e-
commerce threats as Amazon dominates the retail market for both print books and e-books. Retail REITs,
therefore, vary greatly in their exposure to tenants at risk of e-commerce disruption.

RETAIL & FOOD SERVICE SALES VS. E-COMMERCE RETAIL SALES GROWTH

60
50
40
30
20
10
0
-10
-20
2008 2010 2012 2014 2016 2018 2020 2022*

Total Retail Sales E-Commerce Sales

*Preliminary data through Q1.
Source: U.S. Census Bureau.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 28

Retailer Categories Listed from Low to High Vulnerability to E-commerce Threat
Online
Type of Retailer Outlook / Rationale
Sales (%)
Gas Stations / Convenience One of the few types of stores immune to online sales;
0%
Stores longer-term could be affected by fleets of driverless cars.
Restaurants have been one of the bright spots for retailers
as consumers increasingly favor experiences and eating
Restaurants (Quick & Full
0% out over groceries. Restaurants may make more sales
Service)
through online food delivery apps, but will still require a
physical location.
We think gyms, family entertainment centers, and movie
Recreation / Fitness /
0% theaters will fare well as they tap into consumers' desire for
Entertainment
more experiences and socialization outside of the home.
Most services by their nature (such as auto repairs, etc.)
Services ND
will still require physical stores.
We think online grocery sales have the potential for large
growth, but over the next few years, e-commerce
Grocery / Supermarkets 2% penetration will likely remain low. Further, hybrid models
(such as "click-and-collect") will still require physical
locations.
LOW

Discount apparel is another bright spot, opening more

stores as traditional department stores close. We think
Discount Apparel ND brick-and-mortar discounters will stay as consumers enjoy
the "thrill of the hunt," while some stores such as Marshalls
do not even offer online shopping.
Similar to services, by its nature will require consumers to
Medical ND
come to a physical medical office.
Includes auto parts, RV dealers, and equipment rentals,
General Merchandise / Misc. 4%-10%
which we view as low risk.
We think dollar stores and other discount retailers will
continue to do well as many of these shoppers purchase
Discount Retailers ND
food or necessity-based items on a regular basis at these
stores.
Consumers generally prefer to get these items on-demand
Liquor / Tobacco 2% and the need to sign for shipments (due to age restrictions)
makes online shopping less convenient.
Some retail REITs have a small portion of non-retail
Other Low Risk 0% properties such as offices or logistics centers, which are
immune to or actually benefit from e-commerce trends.
Some banks continue to open physical branches, but
Banking / Finance ND younger generations increasingly prefer to do all banking
online or through mobile apps.
Furniture and home furnishing sales are already over 30%
online, but home improvement has low-single-digit
Home Décor / Home
33% / 2% penetration as DIY'ers prefer store assistance and
Improvement
expertise, while contractors need parts on demand with
ability to return excess supplies.
We think some health and beauty sales will continue to
Beauty Supplies 7% move online but believe consumers still prefer to sample
MEDIUM

products in-store.
Amazon's purchase of PillPack has spurred renewed
interest in online pharmacy sales, which we think will
Drugstores 6%
continue to grow but at a slower pace than other
categories.
Native-online brands such as Warby Parker are now
Optical ND opening physical stores, which we think demonstrates the
value of brick-and-mortar for this category.
Mass merchandisers like Walmart and Target will look to
integrate e-commerce with their current store footprint,
Mass Merchandiser 7%
while we think discount clubs like Costco will continue to
fare well.

29 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 Moderate risk, in our view, as products are commoditized,
Party Supplies ND but consumers may want to view products in person or
need to make multiple trips.
Previously a category viewed as safe from online sales, we
think apparel is actually medium-to-high risk. While we
Apparel and Accessories don't see clothing stores disappearing overnight, we think
25%
(including Footwear) current online pressures will force major reconfiguration of
stores and supply chains and how brands interact with
consumers.
E-commerce penetration has doubled from 2010, which we
see as continuing due to convenience and savings.
Pet Stores & Services 18%
However, vet and grooming services will provide some
insulation.
We think the bankruptcy of Sports Authority highlights
Sporting Goods 21%
another big-box category at risk to e-commerce.
Many products are commoditized and do not require expert
assistance. The merger of Office Depot and OfficeMax
Office Supplies 31%
highlights another big-box store category at risk to e-
HIGH

commerce.
We think nearly all consumer electronics sales will move
Electronics 34% online due to better pricing and extensive customer
reviews/recommendations.
The bankruptcy of Toys 'R' U.S. (while precipitated by high
leverage) is indicative of another big-box retailer that will
Hobbies, Toys, Games 25%
likely not be able to compete with lower prices and more
selection online.
The first casualty of Amazon, which still dominates as
Books 70% 40%-55% of all print books are purchased through
Amazon.com, plus Amazon's near-monopoly of e-books.
Source: U.S. Bureau of the Census, Packaged Facts, JLL, CFRA calculations; ND = No Data.

Office REITs
Office REITs own office buildings usually classified between urban or suburban geographies. These
REITs benefit when employment rises, forcing companies to find more space for their workers, and suffer
when companies lay off staff or move operations elsewhere. Office space generally is leased for several
years; therefore, the impact of changes in supply and demand can take time to flow through earnings and
funds from operations.

CFRA has a negative fundamental outlook on the office REIT sub-industry, given our fundamental
expectation that a recovery will be below pre-pandemic lease occupancies. We have moved from a
vibrant office market with full employment to economic slack in office real estate. Most offices across the
U.S. are open, but when will most employees follow? Perhaps when we are all vaccinated or Covid-19
ends.

History suggests office REITs’ share prices are sensitive to the economy and employment growth. While
both of these metrics declined sharply at the beginning of Covid-19 and remain poised to rebound, we
may be entering a new normal as to how companies and their employees want to use office space.
Looking ahead to 2022, office real estate is seeing signs of recovering, but the new normal may be very
different, with safeguards to protect workers. Delta and Omicron variants are likely to hurt office REIT
performance as well.

YTD through August 30, 2022, the Dow Jones U.S. Real Estate Office Index was down 28.8% versus
S&P Composite 1500 Index’s decline of 15.3%. In comparison, the price performance for office REITs
was up 23.4% in 2021 versus the S&P Composite 1500 Index’s gain of 28.5%. As of August 17, 2022,
S&P Global Market Intelligence indicated office REITs traded at 1.3x P/B and have a TEV/Unlevered FCF
of 19.7x compared to U.S. equity REITs trading at a 2.8x P/B and 20.6x TEV/Unlevered FCF multiple.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 30

 U.S. OFFICE REIT EBITDA-TO-INTEREST EXPENSE
(in multiples)
6.0

5.5

5.0

4.5

4.0

3.5

3.0
2017 2018 2019 2020 2021
EBITDA-to-interest expense Recurring EBITDA-to-interest expense

Source: CFRA, S&P Global Market Intelligence.

U.S. OFFICE REIT FUNDS FROM OPERATIONS & REAL ESTATE INVESTMENT
(in percent)
12 45
10 44
8 44
6 43
4 43
2 42
0 42
-2 41
-4 41
2017 2018 2019 2020 2021
Real estate investment growth
Funds from operations growth
Funds from operations-to-total revenue (right scale)

Source: CFRA, S&P Global Market Intelligence.

31 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

New Normal and the Great Resignation Hurt Office Outlook
Employers fear the “Big Resignation” with elevated job movement. We see major risks with a liberated
workforce that seeks to work full-time remotely or in a hybrid model that requires one to be in the office
one to three days a week. In 2022-2023, we view these work scenarios as negative for office real estate
cash flows and office market values. Large urban markets that depend on public trains, subways, and
buses may lag the rest of the country where you can drive to the office. Office REITs’ portfolios have high
concentrations of properties in dense, urban markets. Office REITs also bear higher operating costs to
revamp the lobby, elevators, office floors, and HVAC systems for Covid-19-compliance.

It will be challenging to get back to pre-pandemic occupancy levels. In H1 2022, physical occupancy
among 10 major markets was about 65% and at the 30% level for New York City and San Francisco. The
pace of employees returning to offices remains a risk that also affects office real estate transactions.

Currently, there are free rent concessions up to nine months for a seven- to nine-year lease. Both small
and large tenants have the pricing power to negotiate lower rental rates, to take less office space, and to
receive other incentives. We think this applies to renewing existing leases or signing new leases
somewhere else. Tenants are thinking about how much office space is required; we see concentration
risk in older office towers and new remote/hybrid policies that thin office workforce.

VACANCY RATES
(in percent)
18
16
14
12
10
8
6
4
2008 2009 2010 2011* 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Office Industrial Retail Rental housing units

*Beginning with Q3 2011, NAR forecasts are generated based on historical data provided by REIS,
Inc., and do not correspond with prior historical information from previous forecasts.
Source: National Association of Realtors.

Leasing activity in Q1 2022 realized positive net absorption rate totaling 1.6m sq. ft., while leasing activity
totaled 45.8m sq. ft., according to CBRE, a leading real estate services firm. The overall vacancy rate fell
by 40 bps to 16.8% Q/Q. Downtown office vacancy rose 10 bps to 16.8%, its highest level since 1994.
Suburban office vacancy was 16.9%, the narrowest rate in many years.

Office construction has slowed further in Q1 2022 to 89.1m sq. ft. REIT companies plan to invest in select
new property developments, as they avoid office acquisitions and seek dispositions of non-core
properties. Many office REITs actively prune non-core properties, generally suburban offices with 80% to
90% occupancy rates versus central business district (CBD) markets with mid-90% occupancy.

That said, over the longer term, we still think that urban markets are likely to remain attractive for drawing
young talent in financial services, social media, and information technology. The panache of live, work,
play in urban markets has been harmed by Covid-19 until the coronavirus is no longer a threat.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 32

Pandemics tend to reshape life to a new normal that no one knows for sure. Retail tenants in high-rise
offices were hurt the worst, and, surprisingly, suburban offices see a comeback with rising occupancies.

Industrial REITs
Industrial REITs own and manage industrial facilities and rent space in those properties to tenants. Some
industrial REITs focus on specific types of properties, such as warehouses and distribution centers. They
play a critical role in the supply chain and are key to helping e-commerce retailers meet their rapid
delivery demands.

YTD through August 30, 2022, the Dow Jones U.S. Real Estate Industrial Index was down 27.1% versus
S&P Composite 1500 Index’s decline of 15.3%. In comparison, the price performance for industrial REITs
was up 55.2% in 2021 versus the S&P Composite 1500 Index’s gain of 28.5%. As of August 17, 2022,
S&P Global Market Intelligence indicated industrial REITs traded at 3.0x P/B and have a TEV/Unlevered
FCF of 34.7x compared to U.S. equity REITs trading at a 2.8x P/B and 20.6x TEV/Unlevered FCF
multiple.

U.S. INDUSTRIAL REIT EBITDA-TO-INTEREST EXPENSE

(in multiples)
14

12

10

0
2017 2018 2019 2020 2021
EBITDA-to-interest expense Recurring EBITDA-to-interest expense

Source: CFRA, S&P Global Market Intelligence.

U.S. INDUSTRIAL REIT FUNDS FROM OPERATIONS & REAL ESTATE INVESTMENT
(in percent)
40 53
35 51
30 49
47
25
45
20
43
15
41
10 39
5 37
0 35
2017 2018 2019 2020 2021
Real estate investment growth
Funds from operations growth
Funds from operations-to-total revenue (right scale)
Source: CFRA, S&P Global Market Intelligence.

33 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

Global Trade, E-commerce Drive Demand for Distribution Facilities
Robust e-commerce growth over the last decade has been the key driver of growth for industrial REITs
due to the e-commerce ecosystem requiring three times the logistics space relative to traditional brick-
and-mortar retail. One of the main drivers of this need for additional space is the requirement for
companies to bring the supply chain closer to the consumer through “last-mile” delivery and distribution
centers. These facilities enable retailers to meet consumer demands, and often retailer promises, for
same day (or faster) shipping of e-commerce orders. This has required retailers to find new industrial
facilities closer to city centers, a major change from historical trends where warehouses were more
confined to sea or intermodal port markets, airports, and other transportation hubs. Other key e-
commerce-related drivers of increased logistics space include the higher selection of goods offered to
consumers (increased SKUs) and an increase in return processing needed for items shipped back to
retailers, with e-commerce resulting in up to 30% more returns on average versus brick-and-mortar retail,
according to CBRE.

Online sales have grown at steady compounded annual growth rates in the U.S., averaging over 17%
since 2010. Online spending in Q1 2022 increased sequentially, up 2.4% from the previous quarter and
6.6% year-over-year. While e-commerce spending as a percent of retail sales peaked over the pandemic
(16.4% in Q2 2020 vs. 14.3% in Q1 2022), we believe online retail still has ample room for further growth,
with Collier’s research estimating it will account for up to 23% of total retail sales by 2025.

Looking ahead, we expect net absorption (demand) to keep pace with new supply through 2022,
promoting elevated rental rate growth. Net absorption, a proxy for demand computed by taking the
industrial square feet leased during a period and subtracting the square feet that became vacant during
that period, has been very strong across U.S. markets over the last few years. In fact, demand (net
absorption) has now outpaced new supply growth for five consecutive quarters as of Q1 2022, according
to Cushman and Wakefield. While new construction has been increasing steadily during this period, new
supply has been hampered by significant supply chain backlogs, labor shortages, and rising materials
costs due to high inflation. In our view, each of these issues is likely to persist through year-end 2022.

As a result of this robust demand environment, overall industry vacancy has also decreased to an all-time
low of 3.3% in Q1 2022. This is again well below the long-run average vacancy rate of 5.9% over the last
15 years, according to CBRE. These decreasing vacancy rates have come despite average year-over-
year rental rate growth that reached an incredible 15.2% in Q1 2022, according to Cushman and
Wakefield. This is a major acceleration in rent growth from just 7.8% year-over-year in Q1 2021 and 1.1%
in Q1 2020. We expect the tight supply and demand conditions to allow rental rates to remain well above
historical levels, although some moderation from 15.2% growth is likely in the second half of 2022 and
into 2023.

Potential risks to our forecast include a significant decline in consumer spending, logistic operations
moving outside city centers in response to rising rents, and a reversal in current supply/demand dynamics
resulting in lower rents and/or occupancy rates.

Tier 1 Market Concentration to be Key for Long-Term Outperformance

Over the last few years, industrial assets have seen record occupancy levels while pushing significant
rental rate increases across nearly all U.S. markets. However, as new warehouse supply closes the gap
on demand, industrial market concentration will become a crucial factor in REITs’ ability to maintain high
occupancy and pricing power. Specifically, we believe concentration within Tier 1 markets will be
essential to Industrial REIT outperformance moving forward. CFRA defines a Tier 1 industrial market as a
market with access to a top-10 U.S. seaport (or major intermodal port/airport) and as part of one of the
top-15 metropolitan statistical areas (MSAs) in the U.S. What makes Tier 1 markets important is that they
are located near the busiest logistics hubs/MSAs, providing quick access to the consumer and generally
having limited available space for new construction due to significant zoning restrictions.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 34

Retailers are willing to pay top dollar to ensure their inventories can be moved quickly through the supply
chain. As a result, retailers are willing to pay premium rents in Tier 1 markets to ensure their inventories
reach their final destinations in time to fulfill promises of same-day delivery to consumers. However,
elevated demand from retailers to be located within these core markets has resulted in limited warehouse
inventory, with vacancy reaching record lows of less than 1% in certain Tier 1 markets, such as Northern
and Southern California. While the obvious solution seems to be building more inventory, these MSAs
often have significant zoning restrictions that make it extremely difficult to start new construction projects.
Moreover, residents that live around these areas often put up significant opposition to changes in zoning
requirements that would allow for additional industrial space, as industrial facilities often bring increased
traffic and noise. As a result, we believe these Tier 1 markets are more protected from new supply
growth, allowing REITs to continue keeping occupancy rates high, while pushing rental rates higher
moving forward. Furthermore, we think retailers will continue to pay premium rental prices for Tier 1
markets despite rising recession risks in 2022 and 2023, as they look to set up their supply chains and
logistics operations for the next decade.

Tier 1 Industrial Markets Based on CFRA Analysis

Expect Continued M&A Activity Moving Forward

Further industry consolidation is another key theme to watch for over the next 12 months. Industrial REIT
M&A activity has been significant over the last year, with multiple significant deals announced. Most
recently, on June 6, 2022, Prologis Inc. agreed to acquire Duke Realty Corporation in an all-stock
transaction that valued the company at $26 billion. This acquisition, which is still pending shareholder and
regulatory approval, would combine the two largest publicly traded Industrial REITs. Only a few months
prior, Blackstone Real Estate Partners, part of Blackstone Inc., agreed to acquire diversified Industrial
REIT PS Business Parks for $7.6 billion. This acquisition is also pending regulatory approval. We view
these acquisitions as clear evidence that large private equity firms and global real estate firms remain
active within the industry and that further consolidation may be likely if firms believe they can use the
recent market pullback to get better deals on industrial assets.

35 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

Health Care REITs
Health care REITs own and manage a variety of health care-related real estate and collect rent from
tenants. Health care REITs’ property types include senior living facilities, hospitals, medical office
buildings, and skilled nursing facilities. One of the emerging subsets of the Health Care REITs is Life
Science REITs. Life Science REITs’ properties include medical offices and labs focusing on developing
life and organismic technologies (e.g., genomic and metabolomic technologies).

YTD through August 30, 2022, the Dow Jones U.S. Real Estate Health Care Index was down 11.7%
versus S&P Composite 1500 Index’s decline of 15.3%. In comparison, the price performance for health
care REITs was up 16.5% in 2021 versus the S&P Composite 1500 Index’s gain of 28.5%. As of August
17, 2022, S&P Global Market Intelligence indicated health care REITs traded at 1.8x P/B and have a
TEV/Unlevered FCF of 4.9x compared to U.S. equity REITs trading at a 2.8x P/B and 20.6x
TEV/Unlevered FCF multiple.

U.S. HEALTH CARE REIT EBITDA-TO-INTEREST EXPENSE

(in multiples)
4.9

4.7

4.5

4.3

4.1

3.9

3.7

3.5
2017 2018 2019 2020 2021
EBITDA-to-interest expense Recurring EBITDA-to-interest expense

Source: CFRA, S&P Global Market Intelligence.

U.S. HEALTH CARE REIT FUNDS FROM OPERATIONS & REAL ESTATE INVESTMENT
(in percent)
15 43
42
10
41
5
40
0 39
38
-5
37
-10
36
-15 35
2017 2018 2019 2020 2021
Real estate investment growth
Funds from operations growth
Funds from operations-to-total revenue (right scale)
Source: CFRA, S&P Global Market Intelligence.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 36

CFRA Maintains Positive Outlook on Health Care REITs Sub-Industry
The health care REIT profile has high barriers to entry and low risk exposures to changes in the
addressable markets. The sub-industry could be characterized as the most defensive property type for
investors – with rental revenue less exposed to cyclical swings of the U.S. economy. In the past, the most
challenging period was when we experienced a growth-oriented investment market.

Despite the disruptive nature of Covid-19 onto health care REITs, a recovery has since ensued.
Life sciences and medical office property types continue to exhibit strong sustained growth, while senior
operating housing properties (SHOP) have rebounded from pandemic lows. Our analysis of each sub-
segment follows:

▪ Senior Housing Benefitting from Higher Vaccination Rates and Positive Demographic Trends
Health care REITs concentrated within senior housing are likely to benefit from higher vaccination
rates and easing Covid-19 variant concerns. However, even with higher vaccination rates (over 91%
of the 65+ population is fully vaccinated), some restrictions will remain in place as facilities operate
with the utmost caution. As a result, industry expenses are likely to remain elevated due to increased
operating costs associated with Covid-19 safety precautions. While we expect labor pressures to
continue easing in 2022, elevated labor costs are likely to remain.

SHOP occupancy should continue rebounding from pandemic lows set in Q1 2021 but will likely fall
short of pre-pandemic levels in 2022. However, favorable supply/demand dynamics are emerging.
There has been a decrease in new senior housing supply, with 35,340 units under construction in Q4
2021, while slightly higher than Q3 2021, coming off the weakest pace since 2015, according to NIC
MAP Data Service. Further, inventory growth in Q1 2022 was the weakest since 2013. This trend is
likely to contribute to both higher occupancy and rent growth as demand returns or exceeds pre-
Covid-19 levels over the long term.

▪ Medical and Life Sciences Properties Show Strength Through Covid-19

Medical Office properties proved resilient over the pandemic, with rent collections now near 100%
and occupancy remaining around pre-Covid-19 levels. Asking rents have continued to increase, and
high demand is likely to offset new supply in 2022, contributing to our positive outlook for medical
office properties.

Life Sciences may face some headwinds through 2022 as funding likely slows from record 2021
levels, but our outlook remains positive. We expect any slowdown in funding to be minor as interest in
drug development, vaccines, and biotechnology remains elevated following the pandemic. Funding
reached $78b in 2021, up from $70b in 2020 and more than double the $36b in 2018, according to
Cushman & Wakefield. Tenant quality is key when evaluating REITs specializing in life sciences as a
tighter funding environment and rising recession risks could put some tenants, especially start-ups, at
increased risk of bankruptcy or missed rental payments.

▪ Long-term Demographic Trends Remain Favorable

Beyond 2022, demographics (an aging population, rising health care spending) are likely to be a
positive trend for this REIT category. Many of the leading health care REITs are actively investing in
attractive areas like life sciences, high-quality managed care operators, and medical office campuses.
Others are concentrated in senior housing – approaching with new strategies to drive higher property
values. We think a closer look at individual companies’ profiles with health care property types
remains crucial when evaluating this industry.

37 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 FORECASTED TREND OF U.S. HEALTHCARE SPEND VS SHARE OF ELDERLY POPULATION

20.5%

20.0% 19.7%
19.5%
19.5% 19.2%
19.0%
19.0% 18.8%
18.6%
18.4%
18.5%

18.0%

17.5%
17.7% 18.1% 18.5% 18.9% 19.3% 19.7% 20.0%
17.0%
2022 2023 2024 2025 2026 2027 2028

Share of elderly population - aged 65+ Health Care Spend as a % of GDP

Source: U.S. Census Bureau, Centers for Medicare & Medicaid Services..

Self-Storage REITs
Self-storage REITs own and manage storage facilities and collect rent from customers. Self-storage
REITs rent space to both individuals and businesses.

YTD through August 30, 2022, the Dow Jones U.S. Real Estate Self-Storage Index was down 8.5%
versus S&P Composite 1500 Index’s decline of 15.3%. In comparison, the price performance for self-
storage REITs was up 74.9% in 2021 versus the S&P Composite 1500 Index’s gain of 28.5%. As of
August 17, 2022, S&P Global Market Intelligence indicated self-storage REITs traded at 7.7x P/B and
have a TEV/Unlevered FCF of 39.5x compared to U.S. equity REITs trading at a 2.8x P/B and 20.6x
TEV/Unlevered FCF multiple.

U.S. SELF-STORAGE REIT EBITDA-TO-INTEREST EXPENSE*

(in multiples)
8.0
7.5
7.0
6.5
6.0
5.5
5.0
4.5
4.0
2017 2018 2019 2020 2021

EBITDA-to-interest expense Recurring EBITDA-to-interest expense

*Latest available.
Source: CFRA, S&P Global Market Intelligence.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 38

 U.S. SELF-STORAGE REIT FUNDS FROM OPERATIONS & REAL ESTATE INVESTMENT*
(in percent)
50 45
40
40
35
30 30
25
20
20
10 15
10
0
5
-10 0
2017 2018 2019 2020 2021
Real estate investment growth
Funds from operations growth
Funds from operations-to-total revenue (right scale)
*Latest available.
Source: CFRA, S&P Global Market Intelligence.

Self-Storage Remains in a “Boom” Cycle as Supply Fears Remain Tempered

The self-storage industry is fragmented, with the top five publicly-traded REITs only owning approximately
25% of the self-storage square footage in the U.S, according to the 2022 Self Storage Almanac. This
makes the industry highly susceptible to periods of over-expansion and a supply glut, followed by busts.
Non-institutional builders (such as individuals or small companies) can quickly build additional supply to
take advantage of the increase in demand. The fact that self-storage facilities could be built almost
anywhere within zoning rules at a relatively low cost also fueled the boom-and-bust cycle.

Shares of self-storage REITs have performed better on a relative basis through the pandemic as self-
storage is typically viewed as a more defensive sector during recessions. In 2021, the Dow Jones U.S.
Real Estate Self-Storage Index was up 74.9%, outperforming the broad Dow Jones Equity All REIT
Index’s 37.2%. However, self-storage REITs have struggled along with the broader equity REIT industry
in 2022 amid high inflation and rising interest rates, with the Dow Jones U.S. Real Estate Self-Storage
Index down 20.9%, in line with the Dow Jones Equity All REIT Index’s 20.6% drop as of July 13, 2022.

2021 saw exceptional rent growth due to people moving and adapting to changing pandemic lifestyles. A
generally strong housing market and increased adoption of flexible working arrangements have all led to
an increased demand for storage. The first half of 2022 has seen the self-storage market remain very
strong, although rental rate growth has started to decelerate from the rapid growth pace set in 2021.
However, through May 2022, industry fundamentals remain strong as properties under construction or in
the planning stages of development represent under 10% of existing inventory while street rental rates
remained at all-time highs, according to Yardi Matrix. We also expect new hybrid working arrangements
to be a long-term tailwind for the industry as many workers will need to set up and maintain home offices
long-term, driving increased demand for self-storage units. In our view, high e-commerce demand and
retailers push to offer “last-mile” delivery solutions should also continue providing tailwinds. In addition, as
inflation stays elevated, self-storages should benefit from its ability to quickly adjust rents, many of which
are on a month-to-month basis.

We were previously concerned about increasing supply given the favorable demand combined with easy
financing and low interest rates, which allowed operators to expand quickly. We admit our concerns of
increasing supply did not come to fruition as anticipated, or at least not to the extent where self-storage
REITs found themselves with too much supply and insufficient demand. Instead, many customers rented
units longer than anticipated while demand increased from others who found themselves working at home

39 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

and needed to free up space. While self-storage supply is increasing, current supply chain issues have
raised the development cost and slowed the construction pipeline, while higher interest rates may make
financing more difficult to come by for many investors. We will continue monitoring supply/demand trends
moving forward for signs of a reversal that could lead to lower occupancy, higher marketing expenditures,
and/or lower rental rates.

VALUE OF PRIVATE CONSTRUCTION PUT IN PLACE FOR SELF-STORAGE

(in millions of dollars, seasonally adjusted annual rate, monthly)

6,000

5,000

4,000

3,000

2,000

1,000

*Data through June.

Source: United States Census Bureau.

Data Center REITs

Through August 18, 2022, the FTSE Nareit Equity Data Center Index was down 23.2%, underperforming
the S&P Composite 1500 Index, which dropped by 15.3%. Price performance for the Data Center REITs
was up 22.7% in 2021 versus the S&P Composite 1500 Index’s gain of 28.5%.

Covid-19 Accelerates Data Center REIT Demand Drivers

We are positive on data centers, which will benefit from continuing growth in global internet traffic, e-
commerce, connected devices, high-definition video, and cloud-based storage and services. We have
recently seen a wave of industry consolidation as private equity firms look to enter the market due to their
attractive return on investment. Moving forward, we expect to see additional M&A activity due to the
benefits of economies of scale in the industry, while many providers also look to expand operations
further internationally.

When Covid-19 hit, there was a large spike in data center usage and traffic as many people were forced
to work remotely. Data traffic grew 60% Y/Y at the peak, which has stabilized to around 30% year-over-
year growth. The constant data usage throughout the day also fuels the strain as people reorganize their
work and home life around their personal schedules. We believe data traffic growth will remain in the 30%
to 50% range annually through 2030 as internet access increases globally while demand drivers such as
video streaming, e-commerce, and others continue growing at very high rates.

Demand is starting to outstrip supply in major markets, benefiting data centers. As of year-end 2021, the
global data center construction pipeline was at record levels, while the U.S. pipeline grew 19% Y/Y,
reaching 727 MW, according to JLL. Demand reached record levels in 2021, with 886 MW of absorption

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 40

in the U.S. However, we believe this trend will likely reverse over the next few years as supply chain
delays, labor shortages, and construction delays ease.

Data center customers remained very healthy throughout the pandemic, and we do not expect many
requests for payment relief through year-end 2022.

How Data Center REITs are Putting the “E” in “ESG”

Data center power consumption is expected to increase as data traffic expands exponentially. Across the
top markets in North America, data center capacity has increased at a healthy rate over the past five
years with no signs of slowing. Data centers are capable of consuming incredible amounts of power.
Based on current estimates, data centers in the U.S. alone consumed approximately 71,500 MW in 2021.
To put this in perspective, one MW is enough to power 700 households. The largest data center in the
U.S. will consume 650 MW of power when fully operational.

Reducing power consumption is a win for both customers and data center operators. Lowering power
consumption can significantly reduce utility bills, which is important to every company. More recently, with
the rise in investor focus on environmental, social, and governance (ESG) metrics, lowering power
consumption also shows a commitment to environmental sustainability. While there are many ways to
improve the performance of the server, networking, and storage hardware, this is generally in the hands
of the customer who owns the equipment. The cooling system is provided by the data center operator.
Having efficient cooling options can be a strong competitive differentiator in a given market.

Datacenter operators are deploying innovative cooling and software monitoring to reduce cooling costs.
Digital Realty, Equinix, and QTS are racing to build data centers that take advantage of the unique
features of the local climate to cut cooling costs. For example, Equinix’s AM3 data center features its
Aquifer Thermal Energy Storage system, which employs cold groundwater in the winter months,
eliminating the need for traditional mechanical cooling and using excess heat to warm nearby buildings.
QTS has deployed smart airflow technology to monitor the temperature at the rack level and adjusts the
amount of cold air delivered based on exactly what is needed. Digital Realty also utilizes cold
groundwater when possible while also using more non-potable water for its evaporative cooling systems
rather than pulling from local potable water sources. These features are very attractive to customers, as
they can then advertise them to their customers. We believe Digital Realty, Equinix, and QTS have a lead
over the competition in terms of the number and efficiency of their data centers, which will help them win
new customers and expand relationships with existing customers.

41 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

Infrastructure REITs
Infrastructure REITs are primarily comprised of wireless tower (cell phone) operators. A long-term
demand exists for these infrastructure REITs as wireless companies are not interested in owning and
maintaining cell phone towers. These companies would prefer to lease from an infrastructure REIT
specializing in these solutions. An infrastructure REIT company would buy or lease the land on which the
tower would be erected. They also seek the right to erect equipment on buildings and other structures.
These operators also benefit from being independent operators as they can have multiple tenants or cell
phone companies on the same tower or site. YTD through August 30, 2022, the FTSE Nareit
Infrastructure REITs Index was down 15.5%, in line with the S&P Composite 1500 Index’s decline of
15.3%. Price performance for the Infrastructure REITs was up 34.7% in 2021 versus the S&P Composite
1500 Index’s gain of 28.5%.

Higher-Frequency Spectrum Bands and 5G Expected to Drive Growth

We maintain a positive fundamental outlook on the tower and broadcast REITs. We see steady growth
prospects in the intermediate term reflecting tenant renewals by leading wireless providers, including
customers integrating past acquisitions. Tower REITs will continue to benefit from higher demand due to
robust mobile data traffic and the need for carriers to continually improve their network quality and
coverage, likely leading to increasing tower ROI.

Here’s why we see growth for wireless towers: 5G will continue to accelerate in 2022 by deploying small
cells and new macro antennas to support the network. In addition, 5G networks will deploy edge
computing, which could present a new revenue stream for these companies, which will be able to lease
space next to the towers.

We are seeing the first wave of C-Band deployments now that the A Block spectrum has been cleared.
However, we note there have been some limited delays due to concerns voiced by the aviation industry,
which is worried that C-band towers will interfere with radio altimeters. While the 5G C-band rollout ramps
up nationally, the target date for the spectrum deployed around airports has been consistently pushed
back. The network is now expected to be gradually rolled out around airports in July 2023. The higher-
frequency spectrum bands are valuable to wireless companies due to the ability to significantly increase
network capacity given how much more spectrum is available in those higher frequencies. However, the
signal travels over shorter distances, requiring more cell sites. As a result, we expect the deployment of
additional spectrum and this densification trend to drive significant demand for tower and small cell assets
in the years to come.

Regulatory Updates
1031 Exchange Could be Eliminated in a Biden Administration
The 1031 exchange – a rule regulating a like-kind exchange – has existed in the tax code for many
decades. It enables a property investor to avoid capital gains taxes on sales in certain circumstances; if
an investor rolls the proceeds of a real estate sale into a future property purchase of equal or greater
value, the profits are exempt from taxation. Until recently, the exemption applied to an array of assets,
including industrial equipment and rental cars. The provision for most industries was eliminated in the Tax
Reform Act of 2017, but it was left open for real estate.

However, President Biden said he wants to use proceeds from “rolling back unproductive and unequal tax
breaks for real estate investors with incomes over $400,000” on childcare and elderly services, leading
experts to believe the 1031 exchange program could be eliminated, which could reduce the number of
transactions that generate tax revenue and reduce liquidity. The proposed elimination would place a
$500,000 limit for individual gains and $1 million for joint returns. This encourages owners to hold on to
properties longer by disincentivizing property sales. It is projected to save property investors $41.4 billion

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 42

between 2020 and 2024, according to Congress’s Joint Committee on Taxation. Real estate developers
can also claim write-offs for losses on borrowed money and claim depreciation on buildings.

However, given the overall economic impact of abolishing the 1031 Exchange, we think the likelihood of
the rule being eliminated is low. According to a May 2021 study by Ernst & Young, tax income from
ancillary businesses associated with the Exchange came to approximately $7.8 billion. In addition, 1031-
related businesses would produce 568,000 jobs, including real estate investors, attorneys, lenders,
escrow specialists, etc., which brings in $27.5 billion in labor income.

State and Federal Governments Mulling Single-Family Rental (SFR) Regulations

Part of the reason homeownership in the U.S. has been made harder to achieve was because of
institutional buyers. These businesses tend to snap up large quantities of foreclosed properties and
subsequently rent them out. Due to the sheer size of their property portfolios and how they conduct
business, institutional buyers tend to drive up property prices and cause an increase in home rentals
rates. Many are infuriated by this practice and have called upon governmental intervention to regulate
affordable housing supply and restrict large Single-Family Rental (SFR) Operators.

Legislation was introduced in July 2022 to clamp down specifically on SFR Operators such as Invitation
Homes, American Homes 4 Rent, Tricon Residential, Progress Residential, and FirstKey Homes.
According to Washington Analysis, a CFRA business, this marks another milestone in the growing
scrutiny of the sector but does not change their view that federal policymakers lack a viable near-term
path to meaningfully restrict or upend current business practices and models. The bill intends to cap rent
increases on most single- and multi-family rental units at CPI or 5% annually, whichever is lower. Despite
its obvious benefits, Washington Analysis thinks the bill has near-zero odds of enactment for at least the
next 2-3 years and believes federal policymakers lack a viable path to restrict or upend the sector
meaningfully.

M&A Environment
In 2021, there were 14 mergers and acquisitions (M&A) involving U.S. REITs with transaction sizes over
$500 million totaling $102.3 billion were announced, representing a 433% increase over the $23.6 billion
in deal value of the 15 transactions announced in 2020, according to S&P Global Market Intelligence. The
2021 M&A deal total was boosted by a wave of deals involving non-traded REITs. YTD through August
23, 2022, a total of 12 deals worth $84.3 billion were announced, of which seven deals worth $46.5 billion
have been transacted.

The largest completed deal YTD through August 2022 was the $13.3 billion acquisition of American
Campus Communities (ACC) by Blackstone REIT. ACC is the largest owner, developer, and manager of
student housing communities in the U.S., with a portfolio of 166 properties in 71 leading universities,
including the University of California-Berkeley, University of Texas, and Arizona State University, among
others. In this all-cash acquisition, Blackstone will acquire all of ACC’s equity and assume all of its debts
in a bet that rents will continue to increase as students gradually return to campus.

In 2021, the largest completed deal was the $17.5 billion merger between VEREIT, Inc. and Realty
Income Corp., where Realty Income became the surviving corporation. Based in Phoenix, Arizona,
VEREIT is a full-service real estate operating company that owns offices, restaurants, single-tenant retail,
and industrial properties. The equity swap deal was completed in November 2021. With the merger,
Realty Income can leverage its expertise, size, and scale to accelerate its investment activities, thus
enhancing shareholder returns. Following the acquisition, Realty Income spun off almost all office assets
in the combined company into a new NYSE-listed REIT named Orion Office REIT Inc.

43 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

On the other hand, the largest announced deal was Prologis’ bid to acquire Duke Realty. Duke Realty is
an industrial REIT with a portfolio of over 150 million sq ft across 20 of the largest logistics markets in the
U.S. The company has an outstanding development pipeline of 11.4 million square feet totaling $1.6
billion as of Q1 2022. On June 13, 2022, Prologis agreed to acquire Duke Realty in an all-stock deal
worth $26 billion, or $55.69 per share, subject to regulatory approvals. We have a favorable view on the
acquisition for PLD as we believe it enhances PLD’s portfolio through DRE’s young (average building age
of 13 years) and modern industrial assets (average size of over 200k sq. ft.). The transaction furthers
PLD’s concentration within core Tier 1 markets, such as Southern California (Inland Empire), New Jersey,
and Chicago, where DRE’s portfolio is heavily concentrated (69% of NOI from Tier 1 markets).

U.S. REIT M&A DEALS ANNOUNCED FROM 2021 THROUGH AUGUST 23, 2022*
(arranged by status, followed by completion date)

DEAL STATUS ANNOUNCE- ACQUIRER TARGET PROPERTY TRANSACTION

MENT DATE FOCUS VALUE
($, in millions)
Announced 8/11/22 Safehold iStar Inc. Diversified REIT 1,776
Announced 5/31/22 PotlatchDeltic CatchMark Timber Trust Specialty REIT 910
Announced 5/10/22 Prologis Duke Realty Industrial REIT 25,425
Brookfield Asset
Announced 5/6/22 Watermark Lodging Trust Hotel REIT 3,666
Management
Land & Buildings
Announced 1/31/22 LXP Industrial Trust Industrial REIT 6,041
Investment Management
Blackstone Real Estate Bluerock Residential Growth Residential
Announced 12/20/21 3,201
Income Trust REIT REIT
Starwood Real Estate Monmouth Real Estate
Announced 7/12/21 Industrial REIT 3,432
Income Trust Investment Corporation
Blackstone Inc.; Blackstone
Completed 4/25/22 PS Business Parks Diversified REIT 7,528
Real Estate Partners IX
Blackstone Real Estate American Campus Residential
Completed 4/19/22 13,294
Income Trust Communities REIT
Corporate Property
Completed 2/28/22 W. P. Carey Diversified REIT 2,947
Associates 18
Completed 2/28/22 Healthcare Trust of America Healthcare Realty Trust Healthcare REIT 10,059
Completed 2/17/22 Ares Management Capital Automotive Retail REIT 3,800
Blackstone Real Estate Preferred Apartment Residential
Completed 2/16/22 5,331
Income Trust Communities REIT
Blackstone Real Estate Residential
Completed 1/24/22 Resource REIT 3,541
Income Trust REIT
American Tower
Completed 11/15/21 CoreSite Realty Specialty REIT 10,281
Investments
KKR & Co.; Global
Completed 11/15/21 CyrusOne Specialty REIT 15,239
Infrastructure Partners
Cerberus Capital
Completed 11/8/21 Management; Highgate CorePoint Lodging Hotel REIT 1,343
Hotels
Industrial Logistics Monmouth Real Estate
Completed 11/5/21 Industrial REIT 3,711
Properties Trust Investment Corporation
Pacific Investment
Completed 9/7/21 Columbia Property Trust Office REIT 3,600
Management Company
Completed 8/4/21 VICI Properties MGM Growth Properties Hotel REIT 18,074
Residential
Completed 7/26/21 Independence Realty Trust Steadfast Apartment REIT 4,495
REIT
Completed 7/19/21 Kite Realty Group Trust Retail Properties of America Retail REIT 4,601
Completed 6/28/21 Ventas New Senior Investment Group Healthcare REIT 2,249
Blackstone REIT.;
Completed 6/7/21 Blackstone Infrastructure QTS Realty Trust Specialty REIT 8,486
Partners
Completed 4/29/21 Realty Income VEREIT Diversified REIT 17,515
Completed 4/15/21 Kimco Realty Weingarten Realty Investors Retail REIT 6,133
*Transaction size over $500 million.
Sources: CFRA, S&P Global Market Intelligence, company reports.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 44

Real Estate Acquisition and Disposition Outlook
The U.S. real estate market slowed considerably in 2020, with significantly reduced acquisitions and
dispositions. In 2021, net acquisitions rose by more than two-fold, mainly due to a low base and a surge
in gross acquisitions. Despite the significant headwinds from rising interest rates (and cap rates) in 2022,
we believe acquisitions will continue to outpace dispositions as investors remain well capitalized.
However, we believe acquisitions are likely to moderate slightly into 2023 as higher borrowing costs push
out some highly leveraged buyers from the market. We also anticipate M&A to remain elevated,
especially if some troubled REITs get acquired.

U.S. REITS ACQUISITIONS AND DISPOSITIONS

($, billions)
150

100

50

-50

-100
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022*

Gross Acquisition Disposition Net Acquisitions

*Data through Q2.

Source: Nareit, S&P Global Market Intelligence.

Asset dispositions have been a key source of capital for REITs, particularly office REITs, which have
been more likely to sell than buy in a robust transaction market with elevated pricing, but we expect that
to change in 2022. An increasing number of private equity (PE) firms and even big asset managers
(Blackrock, etc.) are focusing more on acquiring real estate. These firms have the advantage of retaining
much higher levels of capital, which enables these firms to raise significantly more debt than the REITs
industry.

45 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

HOW THE INDUSTRY OPERATES

Types of REITs
REITs are classified according to whether they invest directly or indirectly, by their ownership structure,
and by the segments of the real estate market that they serve.

Direct Versus Indirect Investment

▪ Equity REITs invest directly, by owning and operating real estate. These companies develop real
estate, operate buildings, and provide tenant services.

▪ Mortgage REITs invest indirectly, by lending to real estate owners or operators, or by buying loans or
mortgage-backed securities. Mortgage REITs now invest largely in completed properties, avoiding the
construction and development loans that created problems for the industry in the early 1970s.

REITs Ownership Structures

REITs may be structured in one of three ways: traditional, Umbrella Partnership REITs (UPREITs), or
downREITs, according to information provided by NAREIT.

▪ Traditional REITs own their assets directly, rather than through an operating partnership.

▪ UPREITs consist of operating partnerships between a limited real estate partnership and a newly
formed REIT and are a tax-efficient way for investors in a limited real estate partnership to obtain
liquidity. The REIT contributes cash from a stock offering to the operating partnership; the real estate
partnership contributes a real estate portfolio. Both the REIT and the real estate partnership obtain
ownership units in the operating partnership.

After a set period (generally a year), owners of the real estate partnership can exchange their operating-
partnership units for cash or for stock in the REIT. Making this exchange generates a tax liability for the
real estate partnership – just as selling the original portfolio would – but partners can spread out their
tax payments by turning in their units over several years.

UPREITs became popular in the early 1990s, after the Tax Reform Act of 1986 had eliminated many of
the benefits of real estate partnerships. At the time, many banks were hesitant to make real estate
loans, which forced owners of partnerships to try to raise equity capital. Raising capital by going public
directly (through IPOs) would have triggered huge tax liabilities.

▪ DownREITs differ from UPREITs in that they own some property directly, whereas UPREITs hold most
of their property in operating partnerships. DownREITs can be formed by a property owner contributing
its properties to a REIT in exchange for shares. The REIT’s contribution may include putting cash into
the downREIT to pay off some of the debt on the contributed properties.

REITs Regulation Today

Although REITs are required to pay 90% of taxable income as dividends, rules in effect as of mid-2004
create an incentive to do more. REITs are allowed to deduct dividends paid to shareholders from their
taxable income, so paying out 100% of taxable earnings allows REITs to avoid corporate taxes entirely.
As might be expected, REITs’ taxable subsidiaries – companies that provide services to tenants in REIT
buildings – are required to pay taxes on their earnings, but REITs can avoid this requirement to a degree
by structuring their business relationships with their subsidiaries in order to minimize profits at the
subsidiary level.

Other key requirements for REITs status, according to information provided by NAREIT, include having a
minimum of 100 shareholders, investing at least 75% of assets in real estate, and receiving at least 75%

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 46

of gross income from rents or interest on mortgages. The Housing and Economic Recovery Act of 2008
increased the ceiling for taxable REITs subsidiaries from 20% to 25% of total assets. In addition, health
care REITs are now able to establish taxable REITs subsidiaries (something not previously allowed under
the RMA), provided an independent contractor is hired to manage the health care facilities. Still, REITs
must continue to focus on owning and financing real estate as their main businesses, and income from
taxable subsidiaries does not count toward the 75% income requirement.

How REITs Make Money

Because REITs have to pay out 90% of taxable earnings as dividends, they find it difficult to build up
large reserves of capital to fund acquisitions or new buildings on their own. As a result, they depend
heavily on capital raised through debt issuances, at-the-market (ATM) equity issuances, property
dispositions to fund new developments, and mergers and acquisitions (M&A).

REITs continually adjust the blend of equity and debt, as well as the combination of long- and short-term
debt, that they use to fund their businesses. Following the real estate and banking crises of the 1980s,
the industry generally scaled back its reliance on borrowing. Debt levels jumped significantly prior to the
2008-2009 financial crisis, but they have more recently declined as managers have sought to reduce
leverage. CFRA notes that REITs generally take on mortgage debt to purchase income-producing
property and that a high debt-to-assets ratio does not necessarily mean that a REIT is unsafe, especially
if it has a high-quality portfolio with a relatively predictable earnings stream.

It is also better that debt maturities be staggered to avoid onerous debt repayment schedules; lease
expirations are also generally staggered. However, many REITs tend to maintain diverse funding
sources, such as loans from banks and insurance companies, as well as corporate bonds, securitizations,
equity, and preferred equity.

A REIT’s profits depend on management’s ability to find and create investments that yield more than the
cost of capital. If a REIT can lock in a wide enough spread to offer returns that are attractive to investors,
it can obtain more capital and continue to make more investments.

Minimizing capital costs is critical to maintaining wide spreads. Rising interest rates increases borrowing
costs, although the impact can be limited if a REIT locks in low borrowing costs by issuing long-term debt
when rates are low. In times of low interest rates, REITs’ stocks can benefit because their high dividend
yields make them especially appealing when bond yields are low.

A REIT’s choice of how to invest its capital also determines profitability. REITs may or may not be
geographically diversified, but they tend to specialize in a given part of the real estate industry, such as
shopping centers, apartments, self-storage space, or warehouses. In addition, public REITs strive to add
higher-quality, better-located properties to their portfolios, which generally allows them to charge higher
rents than generic properties.

47 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

HOW TO VALUE A COMPANY IN THIS INDUSTRY
At CFRA, we recommend a top-down approach to valuation.

Industry Drivers
GDP. GDP measures the value of the goods and services produced in a given area during a defined
period. Percentage changes in inflation-adjusted GDP show whether (and how fast) a given economy is
growing or shrinking. This economic indicator is reported on a quarterly basis by the U.S. Bureau of
Economic Analysis (BEA), part of the U.S. Department of Commerce (DOC). The BEA issues advance
and preliminary estimates of GDP prior to reporting the final GDP figure for the quarter.

GDP is essential to understanding trends that affect real estate investment trusts (REITs) and the real
estate industry in general. For example, rapid economic growth can encourage companies to hire workers
and increase inventories, adding to demand for office and warehouse space. Slow growth or recessions
can undermine consumer spending, harming the prospects of REITs that specialize in retail space.

Unemployment rate. This statistic, defined as the percentage of the civilian workforce seeking jobs but
unable to find work, is most important to office REITs. Because employers need more office space as they
add to their workforces, declines in unemployment point to better conditions for these companies. Each
month, the U.S. Bureau of Labor Statistics (BLS), a division of the U.S. Department of Labor, releases
figures on both unemployment and the net creation of nonfarm jobs.

Retail sales. The U.S. Census Bureau (part of the U.S. DOC) publishes estimates of retail sales each
month, offering an indication of both the strength of consumer demand and the prosperity of the retail
segment. The figures matter to retail REITs because retailers are more likely to maintain existing outlets,
and open new ones, when sales are rising. Declining retail sales can also make it harder for retailers to
keep up with their lease payments.

New residential construction. Housing starts, reported monthly by the U.S. Census Bureau, provide an
indication of the amount of new housing that will be available in the future. Increases in the supply of
housing force landlords to compete more aggressively for tenants, making it harder for residential REITs
to raise or maintain rents. Statistics on both single-family and multifamily housing are available. The
single-family figures provide an indication of the outlook for competition from homes for sale, while
statistics on multifamily housing (buildings with five or more units) herald changes in the supply of rental
space.

Occupancy rates. Calculated as the ratio of occupied space to total available space, which is the
converse of vacancy rate (discussed below). This statistic serves as one of the indicators of the strength
of a particular real estate market.

Vacancy rates. Calculated as the ratio of unleased space to total available space, vacancy rates indicate
the strength of the rental market for a particular type of real estate in a particular area. Higher vacancy
rates put pressure on landlords to reduce rents or offer incentives (such as charging no rent for the first
month of a lease) in order to attract tenants. Real estate industry research firms and commercial real
estate brokers, such as CBRE Group, Inc., Cushman & Wakefield, and Marcus & Millichap, provide
occupancy statistics and projections for the U.S. as a whole and/or for individual markets.

Net absorption. Net absorption is the amount of square feet leased during the period minus the space
that is vacated. Absorption statistics show how rapidly demand is soaking up new supplies of space.
Figures on absorption are available from groups such as Reis and CBRE’s Econometric Advisors unit.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 48

Company Analysis
In evaluating a real estate investment trust (REIT), an investor should first examine the real estate
industry’s current health and future prospects relative to general economic conditions, using both
qualitative and quantitative factors. On the quantitative side, it is important to examine a variety of ratios
and metrics before determining the appropriate valuation.

Qualitative Factors
There are key qualitative factors to analyze. These factors include the firm’s lines of business, its
geographical diversification, and its leasing arrangements.

Lines of Business
REITs are a varied lot. Although grouped in the same industry, these companies often have operations
that are driven by different segments of the economy. Therefore, when assessing a REIT, it is important
to understand the sources of a firm’s revenues and the factors that could affect earnings and dividends,
including seasonality and cyclicality.

Simon Property Group Inc., for example, is a large owner and operator of regional malls and premium
outlet centers; therefore, its business depends heavily on the state of the retail segment. An investor must
ascertain where the company is in the retail cycle. Is consumer spending likely to be robust, which would
motivate retailers to expand, thereby increasing demand for space and rental rates? Or is consumer
spending likely to be sluggish in an overcrowded retail environment, which could herald an increase in
bankruptcies, store closings, and higher vacancies?

For other kinds of REITs, revenues may be influenced by different factors. For example, hotel REITs are
heavily dependent on consumer and business travelers who tend to stay in hotels for short time periods,
so they have more volatile income streams. Health care REITs are dependent upon the fate of their
tenants, such as hospitals, with increasingly less dependence on government reimbursements.
Nonetheless, these reimbursement levels are relatively modest, but the tenant operators of health care
facilities tend to have narrow operating margins, making it harder for health care REITs to raise rents on
their properties than it might be for other kinds of REITs.

Geographic Diversification
In evaluating a REIT, it is important to look at the locations of the properties in a company’s portfolio. Are
the company’s assets concentrated in one market or section of the country? If so, then its performance
could be overly dependent upon the health of that region. If properties are dispersed around the country,
the operations should be less subject to regional economic shifts. Are the properties in supply constrained
markets (such as New York or San Francisco), where land is relatively expensive and difficult to obtain, or
in places like Dallas or Atlanta, where the supply of developable land is greater and barriers to entry
lower? Industrial and apartment REITs with properties in the latter two cities might have more difficulty
raising rental rates on expired leases than those in New York or San Francisco.

Leasing Arrangements
An investor should also determine how soon a company’s leases expire, the terms of the leases, and the
difference between current market rental rates and the rents the company is receiving under leases
already in place. Companies stand to benefit if many of their leases are due to expire at a time when
rents are rising. Conversely, revenue can stagnate or fall if a REIT must renegotiate many of its leases
when rents are declining.

Retail, office, and industrial REITs tend to write multiyear lease agreements with their corporate tenants;
these agreements typically include early termination penalties to ensure that the tenant fulfills its

49 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

obligations. Such REITs typically renew only 5% to 10% of their portfolios each year; therefore, they are
generally less sensitive to short-term changes in market conditions than are hotel and apartment REITs.
Hotels tend to lease their rooms on a daily basis, and apartment REITs rent their apartments on an
annual basis, so their income is much more sensitive to changes in demand and rental rates.

Quantitative Factors
Several measures should be analyzed to assess a firm’s potential for financial success. These include
funds from operations (FFO), adjusted FFO, earnings per share (EPS), dividend yield, and several ratios.

Funds from Operations

The most commonly accepted and reported measure of a REIT’s operating performance is FFO: a REIT’s
net income, excluding gains or losses from sales of depreciated operating property (but including sales of
undepreciated land), and adding back real estate depreciation. Adding back depreciation of real estate
assets allows investors to get around the fact that, although U.S. accounting standards assume that the
value of buildings diminishes predictably over time, it actually rises or falls depending on market
conditions. Historically, the value of real estate assets has appreciated over the long term.

The formula for FFO is:

GAAP Net Income

(+) Depreciation and Amortization
(-) (Gains)/Losses on Sales of Property
=Funds from Operations (FFO)

Watch Out! Extending the depreciable life of an asset will boost a company's earnings while
shortening depreciable lives will decrease earnings. Therefore, it is important to refer to the
notes to the financial statements to ensure that a change in depreciable life has not
occurred. Additionally, compare the depreciable lives used by competitors to those used by
the company.

Adjusted Funds from Operations

The National Association of Real Estate Investment Trusts (NAREIT), a trade association for REITs,
defines adjusted funds from operations (AFFOs) as FFO minus two items: normalized recurring
expenditures that a REIT capitalizes, and rents calculated on a “straight-line” basis (that is, averaged over
the life of each lease). AFFOs are often referred to as funds available for distribution (FAD) or cash
available for distribution (CAD) to shareholders. If AFFO has risen annually for several consecutive years,
the increase indicates that a company may have positioned itself to achieve sustainable growth.

Watch Out! By making nonstandard adjustments to FFO REITs can effectively inflate FFO.
Inflating FFO can result in performance measures that are not comparable to peers and can
be motivated by executive compensation plans.

Earnings per Share

Earnings per share (EPS) are equal to a company’s total earnings, divided by the number of shares
outstanding. Although real estate experts believe EPS are not widely used or as accurate a performance
measure as FFO, EPS does allow comparisons with companies in other property groups.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 50

 Watch Out! Real Estate Companies capitalize a portion of their interest costs that relate to
the financing of construction projects. As a result, capitalized interest costs are recorded on
the balance sheet and then depreciated over the life of the related asset. This provides a
benefit in the period incurred as interest expense is typically expensed as incurred. Thus,
management can boost earnings by allocating an increasing portion of interest costs as
capitalized interest.

Dividend Yield
To arrive at this measure, annual dividends per share are divided by a company’s share price. This is an
important measure for REITs, because a relatively high average dividend yield is one reason why the
industry is attractive to investors. U.S. REITs are required to distribute 90% of taxable earnings to
shareholders.

Ratios
Several financial ratios are of particular interest when analyzing a REIT.

◆ Debt as a percentage of capitalization. This ratio allows investors to compare the level of borrowing
used by different REITs. This comparison is important because REITs that rely too heavily on borrowing
may be especially vulnerable during difficult times, as illustrated by the real estate and banking crises of
the 1980s and 2009. While many U.S. REITs remembered the trouble that REITs had in the 1980s and
2009, some have increased debt as credit has remained abundant through early 2020. When the
coronavirus hit, many REITs scrambled to raise even more debt and fully draw their lines of credit in order
to secure liquidity to sustain operations through the crisis. While some REITs have made moves to repay
this short-term debt or convert it to long-term debt, we have yet to see the full impact through this credit
cycle.

◆ Interest coverage. This is recurring earnings before interest, taxes, depreciation, and amortization
(EBITDA) divided by interest payments plus preferred dividends; it provides a measure of a REIT’s ability
to meet payments on financial obligations.

◆ Ratio of fixed-rate to floating-rate debt. Companies that rely more on variable-rate borrowings stand
to benefit when interest rates are falling, but they may be squeezed when rates rise. Investors’
expectations for rising rates may undermine prices for REITs that rely on floating-rate debt, even if actual
borrowing costs do not increase.

REIT Valuation
Any discussion of valuation should be prefaced by a mention of how REITs differ from other companies,
and how these differences affect valuation. We focus on both elements below.

REITs Tests
To qualify as a REIT and avoid taxation of profits, companies must meet a series of tests, some of which
are instrumental in selecting valuation models and formulating assumptions. The most important of these
are the ownership and payout tests.

◆ The ownership test. REITs are required to hold at least 75% of assets in real estate or real estate-
related securities. The ownership test means that REITs typically hold assets that have demonstrated a
propensity to appreciate over time. Most other kinds of companies, in contrast, hold intangible assets or
assets that depreciate over time due to wear or obsolescence. Because REITs are backed by positive net
asset value (NAV), REITs tend to be somewhat less risky than other publicly-traded companies.

51 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

◆ The payout test. REITs are required to pay out at least 90% of taxable income in the form of dividends,
either common or preferred. To meet the payout test, REITs typically pay out more than 100% of earnings
in the form of common dividends, making the stocks particularly attractive to investors interested in yield.
These trusts may have other cash sources, which enable the REITs to pay out dividends more than
100%.

Because the dividend portion of total return can never be negative, REITs shares typically have a
relatively low correlation with most stocks and bonds; i.e., they tend to behave differently under identical
market conditions. Because of their high dividend yields, REITs tend to have a lower standard deviation
of returns than many stocks, meaning they are less volatile over the long term. Because of these factors,
a lower risk premium is usually assigned to REITs stocks that have a lower beta than the broader equity
market. REITs with longer lease terms, which provide some protection during down cycles, tend to be
less risky than the industry as a whole.

Valuation
As opposed to book value (i.e., the value of a company according to its balance sheet), the intrinsic value
of a company reflects what the company’s actual sale price would be based on other value
considerations. There are different ways of measuring the intrinsic value of a REIT company, including
NAV, the dividend discount model, the discounted cash flow model, and replacement value.

◆ Net asset value. One measure of intrinsic value that we think has taken on added importance is net
asset value (NAV) per share. While the book value of many companies can be valued using generally
accepted accounting principles (GAAP), CFRA thinks this approach presents problems for REITs-
valuation purposes.

In the U.S., GAAP requires buildings to be depreciated on a straight-line basis over a defined period,
typically about 30 years. Historically, however, the value of land and buildings has appreciated over the
long term. As a result, a divergence between book value and the actual market value of the company’s
portfolio develops and tends to grow wider over time, resulting in the understatement of a REIT’s potential
break-up value. What we try to estimate in the NAV calculation is the potential value per share if the
company were to liquidate its property portfolio.

The first step in calculating NAV is to estimate the total net operating income of the properties owned by
the REIT. Net operating income measures the forward annualized cash flow (primarily rental income) that
a property or portfolio of properties will generate. CFRA does this by subtracting estimated property
operating expenses from assumed rents. We also make an adjustment for other items – such as straight-
line rents recorded but not received, as well as estimated recurring capital expenditures, such as tenant
installation costs and leasing commissions – that would be incurred to reach the estimated rent.

We then determine the cash rate of return, or capitalization (cap) rate, at which properties are generally
trading in private property transactions. Applying the cap rate to our estimated portfolio NOI, we can
calculate an approximate value at which the properties could be sold to other investors. (For this
calculation, we ignore non-operating corporate expenses, because it is assumed that only the assets are
being sold.)

To the estimated value of the property portfolio, we add all tangible assets on the balance sheet, including
properties under construction, cash, and so forth, but we generally avoid intangible assets, assuming little
value could be derived from them if the company were to liquidate. From this sum, we subtract liabilities,
minority interest, and “mezzanine” financing (a kind of hybrid financing that fills the gap when the
combination of equity and primary debt falls short of the capital needed) to arrive at a NAV. We divide this
by the number of shares outstanding to calculate NAV per share.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 52

On the other hand, relative valuation aims to assess the value of a company compared with its peer
companies. Common methods of measuring relative REITs valuations include price-to-funds from
operations (P/FFO); enterprise value-to-earnings before interest, taxes, depreciation, and amortization
(EV/EBITDA); current yield; and yield spreads. These can be valuable tools when choosing companies in
which to invest.

◆ P/FFO. One of the most common relative valuation metrics is P/FFO. This is similar to the much more
common price-to-earnings (P/E) ratio used to value companies relative to their peers. To calculate P/FFO,
we simply divide the market price of the stock by our forward estimate of FFO. Comparing the result with
the average for peer companies reveals whether a stock is trading at a premium or discount relative to
shares of other REITs. Of course, shares of individual companies often trade at a discount or premium for
valid reasons, such as higher growth rates, geographic concentration in stronger or weaker markets, or
concentration in property types with stronger or weaker fundamentals than other REITs.

◆ EV/EBITDA ratio. EV/EBITDA attempts to determine what one company may be willing to pay for
another. EV is calculated by multiplying the current market price of the shares by the number of shares
and equivalents outstanding, and then adding debt; it gives an idea of what it would cost to purchase the
company given today’s market capitalization. We divide this by an estimate of forward EBITDA to arrive at
a normalized multiple similar to P/E or P/FFO. EBITDA is used because it closely matches cash flow from
operations and assumes no taxation, since the tax rate of the acquiring entity is not known.

If there is significant merger and acquisition (M&A) activity in a particular property type, it will be easy to
perform the EV/EBITDA calculation on actual market transactions, thus arriving at a benchmark market
multiple. By comparing this multiple to a particular company’s EV/EBITDA, we can determine if its shares
are trading at a premium or discount to the market. If a company is trading at a significant discount, it may
be a takeover candidate. By applying the market multiple to the company’s EBITDA, and then reversing
the EV calculation, we can determine what the shares might be worth to an acquiring entity.

◆ Current yield. This is the company’s stated annual dividend divided by its price per share. This
normalizes dividend payments and gives U.S. a percentage that can be compared with the average of
peers to determine if a company’s stock is trading at a premium or discount relative to peers. As with
P/FFO or P/E comparisons, there are often logical reasons for a company’s stock to trade out of line with
peer averages, so we must consider other factors to determine whether today’s market price is in line with
our own assessment of relative value.

◆ Yield spreads. Because REITs are high-yield instruments, it is worthwhile to check the spread
between a REIT’s current yield and that of alternative income-oriented investment instruments, such as
utility stocks or Treasury bonds. Although REITs yields have historically traded at a positive yield spread
to the 10-year Treasury, for example, this spread varies widely and has periodically dipped to negative
territory. REITs could historically grow dividend payments at a rate exceeding inflation, while the yield on
a Treasury is static once purchased.

In a period of improving fundamentals, REITs will often be able to increase dividends in future periods,
making the stocks more attractive than fixed-income investments and contributing to periodic narrowing of
yield spreads. Utility companies can also raise dividends over time based on their fundamentals, which
should be considered when making yield comparisons with REITs.

53 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

GLOSSARY
Absorption—The amount of space leased or sold in a given location over a set period. Net absorption is the amount
of square feet leased during the period, minus the space that is vacated.

Absorption rate—Absorption expressed as a percentage of the total square footage available.

Adjusted funds from operations (AFFOs)—Generally equal to the trusts funds from operations (FFO) with
adjustments made for recurring capital expenditures used to maintain the underlying assets of the REIT.

Apartment REIT—A REIT that specializes in investing in multi-family housing, also known as multi-family residential
property.

Capitalization rates (cap rates)—Ratio of current net operating income to the value of a property.

Diversified REIT—A REIT that owns a diversified portfolio in several real estate groups.

Equity REIT—A REIT that owns or holds equity in rental real estate; differs from a mortgage REIT.

Funds from operations (FFO)—The most commonly accepted and reported measure of a REIT’s operating
performance. FFO, as defined by the National Association of Real Estate Investment Trusts (NAREIT), is equal to a
REIT’s net income, excluding gains or losses from sales of property, and adding back real estate depreciation.
(Adding back depreciation allows investors to get around the fact that historical accounting standards assume that the
value of real estate assets diminishes predictably over time.)

Health care REIT—A REIT that owns health care properties, including long-term care facilities and hospitals.

Industrial REIT—A REIT that specializes in industrial properties.

Mortgage REIT—A REIT that originates or acquires mortgages or other loans secured by real estate collateral.
Differs from equity REITs in that it does not own real estate.

Net asset value (NAV)—One measure of a REIT’s intrinsic value, which estimates the potential value per share if the
company were to liquidate its property portfolio.

Occupancy rate—The percentage of space in a given property or market that is occupied.

Office REIT—A REIT that specializes in commercial properties.

Real estate investment trust (REIT)—A private or public corporation that pays no income tax as long as its
operations are restricted to certain commercial real estate activities. To qualify as a REIT, a company must pay out
90% of its taxable income to investors each year.

Real estate operating company (REOC)—A company that invests in real estate, with shares traded on a public
exchange. Similar to a REIT, albeit more flexible in terms of the types of real investments they are capable of making,
as well as different in earnings distribution (an REOC reinvests into the business, compared with a REIT that
distributes them to unit holders).

Tax Reform Act of 1986—Federal law that permitted REITs not only to own but also to operate commercial real
estate properties.

Vacancy rate—The percentage of space in a given property or market that is not occupied.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 54

INDUSTRY REFERENCES
PERIODICALS REGULATORY AGENCIES

REITWatch Board of Governors of the Federal Reserve

reit.com/data-research/data/reitwatch System
Statistical report on the REITs industry by the federalreserve.gov
National Association of Real Estate Investment Trusts The Federal Reserve System supervises and
(NAREIT). regulates banks; maintains the stability of the financial
system; conducts U.S. monetary policy by influencing
MarketBeat Report money and credit conditions; and provides certain
cushmanwakefield.com/en/research-and-insight financial services to the U.S. government, the public,
Statistical report on the industrial real estate market financial institutions, and foreign official institutions.
by Cushman & Wakefield.
MARKET RESEARCH FIRMS
U.S. Office Market Outlook Report
colliers.com/en-U.S./U.S./insights/usresearchlibrary CBRE Group, Inc.
Report and statistics on the office real estate segment cbre.com
by Colliers International. Provides integrated commercial real estate services.

U.S. Office MarketView Snapshot Colliers International

cbre.U.S./Research-and-Reports/U.S.-Research colliers.com
Market research on the U.S. office market by the Real estate research service that offers supply and
CBRE Group, Inc. demand statistics for the major sectors of the real
estate markets; it also provides local market
TRADE ASSOCIATIONS information.

National Association of Real Estate Investment Coresight Research

Trusts (NAREIT) coresight.com
reit.com/nareit Coresight is a research and advisory that provides
National association for REITs and publicly traded analysis and consulting to organizations navigating
real estate companies. Excellent source of statistics the intersection of retail, technology, and fashion
and industry views on regulatory developments.
Cushman & Wakefield
GOVERNMENT AGENCIES cushmanwakefield.com
Global private commercial real estate services
U.S. Bureau of Economic Analysis (BEA) company that provides reports and statistics on the
bea.gov real estate market.
BEA produces and disseminates statistics that
provide a comprehensive, up-to-date picture of U.S. JLL Inc.
economic activity. jll.com
Jones Lang LaSalle Incorporated is a global
U.S. Bureau of Labor Statistics (BLS) commercial real estate services company, founded in
bls.gov the United Kingdom with offices in 80 countries.
This division of the U.S. Department of Labor is the
federal government’s principal fact-finding agency in Marcus & Millichap
the broad fields of labor, economics, and statistics. marcusmillichap.com
Marcus & Millichap provides real estate brokerage,
U.S. Department of Commerce (DOC) mortgage brokerage, research, and advisory services
commerce.gov in North America in the field of commercial property.
Its divisions include the U.S. Census Bureau, which
publishes retail sales estimates, housing statistics, as National Investment Center for Seniors Housing &
well as population statistics and projections. Care (NIC)
nic.org
A nonprofit organization that enables access and
choice by providing data, analytics and connections
that bring together investors and providers.

55 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

Newmark Group
nmrk.com
A publicly-listed commercial real estate advisory and
services firm.

STR, Inc
str.com
A division of CoStar Group that provides market data
on the hotel industry worldwide, including supply and
demand and market share data.

SNL Real Estate–S&P Capital IQ Pro

spglobal.com/marketintelligence/en/campaigns/real-
estate
Financial information and research firm that collects,
standardizes, and disseminates corporate, financial,
market, and merger and acquisition (M&A) data, plus
news and analytics on banking and other industries.

Yardi Matrix
yardimatrix.com
Yardi Matrix researches and reports on multifamily,
student housing, office, industrial, and self-storage
properties across the U.S.

ONLINE RESOURCES

Placer Labs, Inc.

Placer.ai
Placer.ai offers a traffic analytics platform that allows
anyone to generate insights into any property.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 56

COMPARATIVE COMPANY ANALYSIS
Operating Revenues
Million $ CAGR(%) Index Basis (2011=100)
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2015 10-Yr. 5-Yr. 1-Yr. 2021 2020 2019 2018 2017 2016
DIVERSIFIED REITS
NYSE:STOR STOR STORE CAPITAL CORPORATION DEC 783.8 693.3 659.2 540.8 452.8 376.3 284.8 61.2 15.8 13.1 275 243 232 190 159 132
NYSE:PSB PSB
NYSE:EPRT EPRT ESSENTIAL PROPERTIES REALTY TRUST, INC. DEC 229.0 164.0 139.4 96.2 54.4 20.7 20.7 NA 61.7 39.6 1107 793 673 465 263 100
NYSE:AAT AAT § AMERICAN ASSETS TRUST, INC. DEC 373.0 342.1 362.6 326.5 310.5 290.6 271.2 6.5 5.1 9.0 138 126 134 120 114 107
NYSE:WRE WRE WASHINGTON REAL ESTATE INVESTMENT TRUST DEC 169.2 176.0 176.7 291.7 280.3 313.3 306.4 (3.2) (11.6) (3.9) 55 57 58 95 91 102

HEALTH CARE REITS

NYSE:WELL WELL [] WELLTOWER INC. DEC 4,742.1 4,606.0 5,121.3 4,700.5 4,316.6 4,281.2 3,859.8 13.7 2.1 3.0 123 119 133 122 112 111
NYSE:VTR VTR [] VENTAS, INC. DEC 3,818.2 3,800.3 3,859.3 3,701.6 3,567.6 3,447.0 3,283.9 8.2 2.1 0.5 116 116 118 113 109 105
NYSE:PEAK PEAK [] HEALTHPEAK PROPERTIES, INC. DEC 1,896.2 1,644.9 1,240.3 1,191.3 1,848.4 2,129.3 1,940.5 1.1 (2.3) 15.3 98 85 64 61 95 110
NYSE:MPW MPW † MEDICAL PROPERTIES TRUST, INC. DEC 1,573.2 1,269.7 870.2 798.7 714.8 541.1 444.7 28.1 23.8 23.9 354 285 196 180 161 122
NYSE:OHI OHI † OMEGA HEALTHCARE INVESTORS, INC. DEC 1,062.8 892.4 928.8 881.7 908.4 900.8 743.6 13.8 3.4 19.1 143 120 125 119 122 121

HOTEL AND RESORT REITS

NasdaqGS:HST HST [] HOST HOTELS & RESORTS, INC. DEC 2,921.0 1,590.0 5,483.0 5,554.0 5,417.0 5,451.0 5,426.0 (4.7) (11.7) 83.7 54 29 101 102 100 100
NYSE:PK PK PARK HOTELS & RESORTS INC. DEC 1,355.0 830.0 2,830.0 2,730.0 2,831.0 2,747.0 2,710.0 NA (13.2) 63.3 50 31 104 101 104 101
NYSE:PEB PEB PEBBLEBROOK HOTEL TRUST DEC 733.0 442.9 1,612.2 828.7 769.3 814.2 777.1 9.7 (2.1) 65.5 94 57 207 107 99 105
NYSE:XHR XHR XENIA HOTELS & RESORTS, INC. DEC 616.2 369.8 1,149.1 1,058.2 945.3 950.2 976.1 7.3 (8.3) 66.6 63 38 118 108 97 97
NYSE:DRH DRH § DIAMONDROCK HOSPITALITY COMPANY DEC 567.1 299.5 938.1 863.7 870.0 896.6 931.0 (0.6) (8.8) 89.4 61 32 101 93 93 96

INDUSTRIAL REITS
NYSE:PLD PLD [] PROLOGIS, INC. DEC 5,163.7 4,736.1 3,530.8 3,102.7 2,866.7 2,739.4 2,356.3 13.3 13.5 9.0 219 201 150 132 122 116
NYSE:DRE DRE [] DUKE REALTY CORPORATION DEC 1,118.6 1,004.3 983.9 957.2 790.3 746.3 805.0 (0.8) 8.4 11.4 139 125 122 119 98 93
NYSE:REXR REXR REXFORD INDUSTRIAL REALTY, INC. DEC 452.2 330.1 267.2 212.5 161.4 125.7 94.0 32.1 29.2 37.0 481 351 284 226 172 134
NYSE:EGP EGP § EASTGROUP PROPERTIES, INC. DEC 409.5 363.0 330.8 299.0 274.2 253.0 235.0 9.0 10.1 12.8 174 154 141 127 117 108
NYSE:FR FR † FIRST INDUSTRIAL REALTY TRUST, INC. DEC 476.1 447.8 425.5 403.7 396.4 378.0 365.8 4.6 4.7 6.3 130 122 116 110 108 103

OFFICE REITS
NYSE:ARE ARE [] ALEXANDRIA REAL ESTATE EQUITIES, INC. DEC 2,126.4 1,893.8 1,541.4 1,335.0 1,129.4 921.5 845.1 14.8 18.2 12.3 252 224 182 158 134 109
NYSE:BXP BXP [] BOSTON PROPERTIES, INC. DEC 2,865.9 2,737.8 2,974.6 2,715.6 2,620.5 2,560.7 2,512.9 4.7 2.3 4.7 114 109 118 108 104 102
NYSE:VNO VNO [] VORNADO REALTY TRUST DEC 1,705.2 1,612.2 2,003.6 2,172.9 2,096.0 2,177.9 1,967.0 (4.9) (4.8) 5.8 87 82 102 110 107 111
NYSE:KRC KRC † KILROY REALTY CORPORATION DEC 955.0 898.4 837.5 747.3 719.0 637.6 581.3 11.9 8.4 6.3 164 155 144 129 124 110
NYSE:CUZ CUZ † COUSINS PROPERTIES INCORPORATED DEC 761.9 748.4 670.2 487.4 513.3 269.8 210.4 20.5 23.1 1.8 362 356 319 232 244 128

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

57 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 Operating Revenues
Million $ CAGR(%) Index Basis (2011=100)
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2015 10-Yr. 5-Yr. 1-Yr. 2021 2020 2019 2018 2017 2016
RESIDENTIAL REITS
NYSE:AVB AVB [] AVALONBAY COMMUNITIES, INC. DEC 2,310.1 2,302.5 2,327.5 2,289.2 2,189.3 2,052.1 1,895.4 9.8 2.4 0.3 122 121 123 121 116 108
NYSE:EQR EQR [] EQUITY RESIDENTIAL DEC 2,464.0 2,571.7 2,700.7 2,577.7 2,471.4 2,425.8 2,745.0 4.9 0.3 (4.2) 90 94 98 94 90 88
NYSE:MAA MAA [] MID-AMERICA APARTMENT COMMUNITIES, INC. DEC 1,778.1 1,678.0 1,641.0 1,571.3 1,529.0 1,125.3 1,042.8 15.8 9.6 6.0 171 161 157 151 147 108
NYSE:ESS ESS [] ESSEX PROPERTY TRUST, INC. DEC 1,552.3 1,562.3 1,583.8 1,485.5 1,450.3 1,329.7 1,216.3 12.8 3.1 (0.6) 128 128 130 122 119 109
NYSE:UDR UDR [] UDR, INC. DEC 1,305.4 1,260.0 1,290.1 1,041.8 1,027.0 964.4 897.6 7.8 6.2 3.6 145 140 144 116 114 107

RETAIL REITS
NYSE:SPG SPG [] SIMON PROPERTY GROUP, INC. DEC 5,114.7 4,602.3 5,671.0 5,645.3 5,527.3 5,435.2 5,257.8 1.7 (1.2) 11.1 97 88 108 107 105 103
NYSE:O O [] REALTY INCOME CORPORATION DEC 2,081.6 1,647.1 1,488.2 1,327.8 1,215.8 1,103.2 1,023.3 17.6 13.5 26.4 203 161 145 130 119 108
NYSE:KIM KIM [] KIMCO REALTY CORPORATION DEC 1,364.6 1,057.9 1,158.9 1,164.8 1,200.8 1,170.8 1,166.8 5.2 3.1 29.0 117 91 99 100 103 100
NasdaqGS:REG REG [] REGENCY CENTERS CORPORATION DEC 1,203.9 1,047.9 1,164.7 1,160.3 1,021.1 645.9 591.2 9.6 13.3 14.9 204 177 197 196 173 109
NYSE:FRT FRT FEDERAL REALTY INVESTMENT TRUST DEC 952.5 827.4 933.8 912.0 856.9 801.6 745.4 5.6 3.5 15.1 128 111 125 122 115 108

SPECIALIZED REITS
NYSE:AMT AMT [] AMERICAN TOWER CORPORATION DEC 9,356.9 8,041.5 7,580.3 7,440.1 6,663.9 5,785.7 4,771.5 14.4 10.1 16.4 196 169 159 156 140 121
NYSE:CCI CCI [] CROWN CASTLE INC. DEC 6,340.0 5,840.0 5,763.0 5,370.0 4,255.0 3,921.0 3,663.9 12.0 10.1 8.6 173 159 157 147 116 107
NYSE:PSA PSA [] PUBLIC STORAGE DEC 3,498.9 2,984.3 2,924.7 2,825.3 2,744.2 2,614.2 2,418.8 6.9 6.0 17.2 145 123 121 117 113 108
NasdaqGS:EQIX EQIX [] EQUINIX, INC. DEC 6,260.0 5,622.6 5,159.2 5,102.3 4,347.6 3,612.0 2,725.9 14.9 11.6 11.3 230 206 189 187 159 133
NYSE:DLR DLR [] DIGITAL REALTY TRUST, INC. DEC 4,426.2 3,846.0 3,217.3 3,079.5 2,483.4 2,159.3 1,778.8 15.3 15.4 15.1 249 216 181 173 140 121

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 58

 Net Income
Million $ CAGR(%) Index Basis (2011=100)
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2015 10-Yr. 5-Yr. 1-Yr. 2021 2020 2019 2018 2017 2016
DIVERSIFIED REITS
STOR STORE CAPITAL CORPORATION DEC 268.3 212.6 285.0 217.0 162.0 123.3 83.8 NA 16.8 26.2 320 254 340 259 193 147
PSB
EPRT ESSENTIAL PROPERTIES REALTY TRUST, INC. DEC 95.7 42.3 41.8 15.6 6.3 5.0 5.0 NA 80.5 126.4 1,915 845 837 312 126 100
AAT § AMERICAN ASSETS TRUST, INC. DEC 28.4 27.7 45.7 19.7 29.1 32.6 38.5 3.6 (2.7) 2.6 74 72 119 51 76 85
WRE WASHINGTON REAL ESTATE INVESTMENT TRUST DEC 16.4 (15.7) 383.6 25.6 19.7 119.3 89.7 (16.9) (32.8) NM 18 (17) 427 29 22 133

HEALTH CARE REITS

WELL [] WELLTOWER INC. DEC 336.1 978.8 1,232.4 805.0 522.8 1,077.8 883.8 4.4 (20.8) (65.7) 38 111 139 91 59 122
VTR [] VENTAS, INC. DEC 49.0 439.1 433.0 409.5 1,356.5 649.2 417.8 (18.2) (40.4) (88.8) 12 105 104 98 325 155
PEAK [] HEALTHPEAK PROPERTIES, INC. DEC 505.5 413.6 45.5 1,061.1 414.2 627.7 (559.2) (0.6) (4.2) 22.2 (90) (74) (8) (190) (74) (112)
MPW † MEDICAL PROPERTIES TRUST, INC. DEC 656.0 431.5 374.7 1,016.7 289.8 225.0 139.6 37.8 23.9 52.1 470 309 268 728 208 161
OHI † OMEGA HEALTHCARE INVESTORS, INC. DEC 416.7 159.3 341.1 281.6 100.4 366.4 224.5 23.0 2.6 161.6 186 71 152 125 45 163

HOTEL AND RESORT REITS

HST [] HOST HOTELS & RESORTS, INC. DEC (11.0) (732.0) 920.0 1,087.0 564.0 762.0 558.0 (3.1) NM (98.5) (2) (131) 165 195 101 137
PK PARK HOTELS & RESORTS INC. DEC (459.0) (1,440.0) 306.0 472.0 2,625.0 133.0 292.0 NA NM (68.1) (157) (493) 105 162 899 46
PEB PEBBLEBROOK HOTEL TRUST DEC (184.9) (391.7) 115.4 13.4 99.9 73.7 94.7 NA NM (52.8) (195) (414) 122 14 106 78
XHR XENIA HOTELS & RESORTS, INC. DEC (143.5) (163.3) 55.4 193.7 98.9 85.9 88.8 2.3 NM (12.1) (162) (184) 62 218 111 97
DRH § DIAMONDROCK HOSPITALITY COMPANY DEC (194.6) (394.4) 183.5 87.8 91.9 114.8 85.6 38.2 NM (50.7) (227) (461) 214 103 107 134

INDUSTRIAL REITS
PLD [] PROLOGIS, INC. DEC 2,939.7 1,481.8 1,573.0 1,649.4 1,652.3 1,209.9 869.4 NA 19.4 98.4 338 170 181 190 190 139
DRE [] DUKE REALTY CORPORATION DEC 852.9 299.9 429.0 383.7 1,634.4 312.1 615.3 24.5 22.3 184.4 139 49 70 62 266 51
REXR REXFORD INDUSTRIAL REALTY, INC. DEC 128.2 76.4 62.0 46.2 40.7 25.1 1.9 NA 38.5 67.8 6,843 4,077 3,307 2,466 2,172 1,341
EGP § EASTGROUP PROPERTIES, INC. DEC 157.6 108.4 121.7 88.5 83.2 95.5 47.9 21.6 10.5 45.4 329 226 254 185 174 200
FR † FIRST INDUSTRIAL REALTY TRUST, INC. DEC 271.0 196.0 238.8 163.2 201.5 121.2 73.8 NA 17.5 38.3 367 266 324 221 273 164

OFFICE REITS
ARE [] ALEXANDRIA REAL ESTATE EQUITIES, INC. DEC 571.2 771.0 363.2 379.3 169.1 (65.9) 144.2 15.8 NM (25.9) 396 535 252 263 117 (46)
BXP [] BOSTON PROPERTIES, INC. DEC 505.2 872.7 521.5 582.8 462.4 512.8 583.1 6.4 (0.3) (42.1) 87 150 89 100 79 88
VNO [] VORNADO REALTY TRUST DEC 176.0 (297.0) 3,147.9 450.0 227.4 906.9 760.4 (12.4) (28.0) NM 23 (39) 414 59 30 119
KRC † KILROY REALTY CORPORATION DEC 628.1 187.1 195.4 258.4 164.6 293.8 234.1 26.4 16.4 235.7 268 80 83 110 70 126
CUZ † COUSINS PROPERTIES INCORPORATED DEC 278.6 237.3 150.4 79.2 216.3 79.1 125.5 NA 28.6 17.4 222 189 120 63 172 63

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

59 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 Net Income
Million $ CAGR(%) Index Basis (2011=100)
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2015 10-Yr. 5-Yr. 1-Yr. 2021 2019 2018 2017 2016 2015
RESIDENTIAL REITS
AVB [] AVALONBAY COMMUNITIES, INC. DEC 1,004.3 827.6 786.0 974.5 876.9 1,034.0 742.0 8.6 (0.6) 21.3 135 112 106 131 118 139
EQR [] EQUITY RESIDENTIAL DEC 1,332.9 913.6 970.4 657.5 603.5 4,292.2 870.1 4.1 (20.9) 45.9 153 105 112 76 69 493
MAA [] MID-AMERICA APARTMENT COMMUNITIES, INC. DEC 533.8 255.0 353.8 222.9 328.4 212.2 332.3 27.0 20.3 109.4 161 77 106 67 99 64
ESS [] ESSEX PROPERTY TRUST, INC. DEC 488.6 568.9 439.3 390.2 433.1 415.0 232.1 26.4 3.3 (14.1) 210 245 189 168 187 179
UDR [] UDR, INC. DEC 150.0 64.3 185.0 203.1 121.6 292.7 340.4 22.3 (12.5) 133.4 44 19 54 60 36 86

RETAIL REITS
SPG [] SIMON PROPERTY GROUP, INC. DEC 2,249.6 1,112.6 2,101.6 2,440.1 1,948.0 1,838.9 1,827.7 8.2 4.1 102.2 123 61 115 134 107 101
O [] REALTY INCOME CORPORATION DEC 359.5 395.5 436.5 363.6 318.8 315.6 283.8 8.6 2.6 (9.1) 127 139 154 128 112 111
KIM [] KIMCO REALTY CORPORATION DEC 844.1 1,000.8 410.6 497.8 426.1 378.9 894.1 17.4 17.4 (15.7) 94 112 46 56 48 42
REG [] REGENCY CENTERS CORPORATION DEC 361.4 44.9 239.4 249.1 176.1 164.9 150.1 21.5 17.0 705.1 241 30 160 166 117 110
FRT FEDERAL REALTY INVESTMENT TRUST DEC 261.5 131.7 353.9 241.9 289.9 249.9 210.2 6.2 0.9 98.5 124 63 168 115 138 119

SPECIALIZED REITS
AMT [] AMERICAN TOWER CORPORATION DEC 2,567.7 1,690.6 1,887.8 1,236.4 1,238.9 956.4 685.1 20.5 21.8 51.9 375 247 276 180 181 140
CCI [] CROWN CASTLE INC. DEC 1,096.0 1,056.0 860.0 622.0 366.0 357.0 1,521.0 20.4 25.1 3.8 72 69 57 41 24 23
PSA [] PUBLIC STORAGE DEC 1,953.3 1,357.2 1,520.5 1,711.0 1,442.2 1,453.6 1,311.2 9.0 6.1 43.9 149 104 116 130 110 111
EQIX [] EQUINIX, INC. DEC 500.2 369.8 507.5 365.4 233.0 126.8 187.8 18.1 31.6 35.3 266 197 270 195 124 68
DLR [] DIGITAL REALTY TRUST, INC. DEC 1,709.3 356.4 579.8 331.2 248.3 426.2 296.7 27.0 32.0 379.6 576 120 195 112 84 144

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 60

 Return on Revenues (%) Return on Assets (%) Return on Equity(%)
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016
DIVERSIFIED REITS
STOR STORE CAPITAL CORPORATION DEC 34.2 30.7 43.2 40.1 35.8 32.8 2.7 2.4 3.4 3.0 2.7 2.5 5.3 4.5 6.8 6.2 5.7 5.4
PSB
EPRT ESSENTIAL PROPERTIES REALTY TRUST, INC. DEC 41.8 25.8 30.0 16.2 11.6 24.2 2.9 1.7 2.1 1.1 0.7 1.1 5.3 3.1 4.8 4.2 3.5 0.0
AAT § AMERICAN ASSETS TRUST, INC. DEC 7.6 8.1 12.6 6.0 9.4 11.2 0.9 1.0 1.6 0.9 1.3 1.6 3.0 2.8 5.7 3.3 4.8 5.5
WRE WASHINGTON REAL ESTATE INVESTMENT TRUST DEC 9.7 NM 217.0 8.8 7.0 38.1 0.9 NM 14.6 1.1 0.8 5.3 NM NM NM 0.1 NM 12.6

HEALTH CARE REITS

WELL [] WELLTOWER INC. DEC 7.1 21.3 24.1 17.1 12.1 25.2 1.0 3.0 3.7 2.7 1.9 3.7 2.1 6.1 8.1 5.3 3.5 7.0
VTR [] VENTAS, INC. DEC 1.3 11.6 11.2 11.1 38.0 18.8 0.2 1.8 1.8 1.8 5.7 2.8 0.5 4.1 4.1 3.9 12.5 6.3
PEAK [] HEALTHPEAK PROPERTIES, INC. DEC 26.7 25.1 3.7 89.1 22.4 29.5 3.3 2.6 0.3 8.3 2.9 4.0 1.9 2.3 2.7 13.8 7.3 4.8
MPW † MEDICAL PROPERTIES TRUST, INC. DEC 41.7 34.0 43.1 127.3 40.5 41.6 3.2 2.6 2.6 11.5 3.2 3.5 8.3 6.0 6.5 24.3 8.2 8.4
OHI † OMEGA HEALTHCARE INVESTORS, INC. DEC 39.2 17.9 36.7 31.9 11.1 40.7 4.3 1.7 3.5 3.3 1.1 4.1 10.5 3.9 8.7 7.7 2.6 9.2

HOTEL AND RESORT REITS

HST [] HOST HOTELS & RESORTS, INC. DEC NM NM 16.8 19.6 10.4 14.0 NM NM 7.5 9.0 4.8 6.7 NM NM 12.3 15.5 7.9 10.7
PK PARK HOTELS & RESORTS INC. DEC NM NM 10.8 17.3 92.7 4.8 NM NM 2.7 5.0 27.0 1.4 NM NM 5.3 8.3 53.8 4.2
PEB PEBBLEBROOK HOTEL TRUST DEC NM NM 7.2 1.6 13.0 9.1 NM NM 1.8 0.2 3.9 2.6 NM NM 3.1 0.5 6.4 4.4
XHR XENIA HOTELS & RESORTS, INC. DEC NM NM 4.8 18.3 10.5 9.0 NM NM 1.7 6.1 3.2 3.0 NM NM 3.2 11.4 6.1 5.1
DRH § DIAMONDROCK HOSPITALITY COMPANY DEC NM NM 19.6 10.2 10.6 12.8 NM NM 5.4 2.7 3.0 3.8 NM NM 9.7 4.7 5.0 6.3

INDUSTRIAL REITS
PLD [] PROLOGIS, INC. DEC 56.9 31.3 44.5 53.2 57.6 44.2 5.0 2.6 3.9 4.3 5.6 4.0 8.5 5.2 6.6 8.2 9.5 7.0
DRE [] DUKE REALTY CORPORATION DEC 76.2 29.9 43.6 40.1 206.8 41.8 8.2 3.3 5.1 4.9 22.1 4.6 15.2 5.9 8.8 8.3 7.2 8.9
REXR REXFORD INDUSTRIAL REALTY, INC. DEC 28.4 23.1 23.2 21.7 25.2 20.0 1.9 1.5 1.7 1.7 1.9 1.7 3.2 2.6 2.8 2.9 3.6 3.1
EGP § EASTGROUP PROPERTIES, INC. DEC 38.5 29.9 36.8 29.6 30.3 37.7 4.9 4.0 4.8 4.2 4.3 5.2 11.1 8.8 11.7 10.7 12.0 16.0
FR † FIRST INDUSTRIAL REALTY TRUST, INC. DEC 56.9 43.8 56.1 40.4 50.8 32.1 6.5 5.2 6.8 5.2 6.8 4.3 13.2 10.7 14.0 10.6 15.1 10.5

OFFICE REITS
ARE [] ALEXANDRIA REAL ESTATE EQUITIES, INC. DEC 26.9 40.7 23.6 28.4 15.0 NM 1.9 3.4 2.0 2.6 1.4 NM 4.0 7.0 4.5 5.6 3.3 NM
BXP [] BOSTON PROPERTIES, INC. DEC 17.6 31.9 17.5 21.5 17.6 20.0 2.3 3.8 2.5 2.9 2.4 2.7 7.7 12.5 8.0 8.7 7.0 7.2
VNO [] VORNADO REALTY TRUST DEC 10.3 NM 157.1 20.7 10.8 41.6 1.0 NM 17.2 2.6 1.3 4.4 2.8 NM 47.3 7.1 3.7 6.6
KRC † KILROY REALTY CORPORATION DEC 65.8 20.8 23.3 34.6 22.9 46.1 5.9 1.9 2.2 3.3 2.4 4.4 12.0 4.2 4.9 6.8 4.7 8.7
CUZ † COUSINS PROPERTIES INCORPORATED DEC 36.6 31.7 22.4 16.2 42.1 29.3 3.8 3.3 2.1 1.9 5.1 1.9 6.1 5.3 4.2 2.9 8.2 2.9

RESIDENTIAL REITS
AVB [] AVALONBAY COMMUNITIES, INC. DEC 43.5 35.9 33.8 42.6 40.1 50.4 5.0 4.3 4.1 5.3 4.8 5.8 9.3 7.6 7.3 9.3 8.5 10.3
EQR [] EQUITY RESIDENTIAL DEC 54.1 35.5 35.9 25.5 24.4 176.9 6.3 4.5 4.6 3.2 2.9 20.7 12.3 8.7 9.3 6.3 5.8 40.4
MAA [] MID-AMERICA APARTMENT COMMUNITIES, INC. DEC 30.0 15.2 21.6 14.2 21.5 18.9 4.7 2.3 3.2 2.0 2.9 1.8 9.0 4.3 5.8 3.6 5.2 4.6
ESS [] ESSEX PROPERTY TRUST, INC. DEC 31.5 36.4 27.7 26.3 29.9 31.2 3.8 4.4 3.5 3.2 3.5 3.4 8.3 9.5 7.2 6.4 7.2 6.9
UDR [] UDR, INC. DEC 11.5 5.1 14.3 19.5 11.8 30.4 1.4 0.7 1.9 2.6 1.6 3.8 3.6 1.6 4.8 5.8 3.4 8.2

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

61 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 Return on Revenues (%) Return on Assets (%) Return on Equity(%)
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016
RETAIL REITS
SPG [] SIMON PROPERTY GROUP, INC. DEC 44.0 24.2 37.1 43.2 35.2 33.8 6.7 3.2 6.7 8.0 6.0 5.9 63.7 37.6 67.7 66.8 47.1 41.3
O [] REALTY INCOME CORPORATION DEC 17.3 24.0 29.3 27.4 26.2 28.6 0.8 1.9 2.4 2.4 2.3 2.4 2.0 3.8 4.9 4.7 4.5 4.7
KIM [] KIMCO REALTY CORPORATION DEC 61.9 94.6 35.4 42.7 35.5 32.4 4.6 8.6 3.7 4.5 3.6 3.4 10.7 18.9 8.0 9.1 8.0 7.2
REG [] REGENCY CENTERS CORPORATION DEC 30.0 4.3 20.6 21.5 17.2 25.5 3.3 0.4 2.2 2.3 1.6 3.7 6.0 0.8 3.8 3.8 3.8 7.1
FRT FEDERAL REALTY INVESTMENT TRUST DEC 27.5 15.9 37.9 26.5 33.8 31.2 3.4 1.7 5.2 3.8 4.6 4.6 9.7 5.0 13.4 9.7 12.5 12.5

SPECIALIZED REITS
AMT [] AMERICAN TOWER CORPORATION DEC 27.4 21.0 24.9 16.6 18.6 16.5 3.7 3.6 4.4 3.7 3.7 3.1 37.1 29.8 28.4 17.0 15.3 13.1
CCI [] CROWN CASTLE INC. DEC 17.3 18.1 14.9 11.6 8.6 9.1 2.8 2.7 2.2 1.9 1.1 1.6 13.1 10.6 7.8 5.2 3.7 4.9
PSA [] PUBLIC STORAGE DEC 55.8 45.5 52.0 60.6 52.6 55.6 11.2 11.5 13.4 15.7 13.4 14.3 21.4 15.2 16.7 19.0 15.7 15.7
EQIX [] EQUINIX, INC. DEC 8.0 6.6 9.8 7.2 5.4 3.5 1.8 1.4 2.1 1.8 1.2 1.0 4.6 3.8 6.3 5.2 4.2 3.2
DLR [] DIGITAL REALTY TRUST, INC. DEC 38.6 9.3 18.0 10.8 10.0 19.7 4.7 1.0 2.5 1.4 1.2 3.5 9.4 2.5 5.6 3.1 3.2 8.9

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 62

 Current Ratio Debt/Capital Ratio(%) Debt as a % of Net Working Capital
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016
DIVERSIFIED REITS
STOR STORE CAPITAL CORPORATION DEC 1.9 2.6 2.7 1.4 1.7 2.1 45.8 42.6 44.5 44.2 45.0 48.6 1884.9 1049.1 1088.5 4113.6 2637.0 2016.3
PSB
EPRT ESSENTIAL PROPERTIES REALTY TRUST, INC. DEC 2.6 3.1 2.4 1.9 0.1 5.7 36.6 35.1 37.8 40.0 107.0 61.0 1273.5 1208.4 2050.6 3162.5 NM 2411.8
AAT § AMERICAN ASSETS TRUST, INC. DEC 3.5 3.8 2.9 2.6 4.0 3.9 57.7 53.0 51.2 61.7 61.1 55.9 965.1 840.5 1144.7 1782.8 1164.7 1149.8
WRE WASHINGTON REAL ESTATE INVESTMENT TRUST DEC 5.4 11.0 2.1 3.9 2.7 2.0 27.4 43.0 43.9 53.6 51.3 51.4 218.7 118.3 1035.1 443.6 790.3 1652.0

HEALTH CARE REITS

WELL [] WELLTOWER INC. DEC 1.9 3.6 7.6 1.9 2.2 3.6 42.7 44.5 46.8 45.2 43.2 43.9 1687.6 570.5 585.6 1408.6 1027.5 578.3
VTR [] VENTAS, INC. DEC 0.4 0.6 0.5 0.4 0.6 1.2 51.7 53.1 52.9 50.6 50.4 50.9 NM NM NM NM NM 9609.0
PEAK [] HEALTHPEAK PROPERTIES, INC. DEC 0.5 3.4 4.9 2.2 3.2 5.2 50.8 46.6 47.7 46.4 58.9 61.1 NM 296.1 186.1 942.8 735.9 426.0
MPW † MEDICAL PROPERTIES TRUST, INC. DEC 9.5 9.2 15.5 10.7 7.0 5.3 57.2 54.7 50.0 47.0 56.1 47.2 215.6 246.5 166.4 203.7 384.0 323.9
OHI † OMEGA HEALTHCARE INVESTORS, INC. DEC 2.7 1.6 1.9 2.4 5.1 3.8 56.1 55.7 54.2 54.7 54.0 50.9 1405.1 2589.2 2332.5 1573.5 685.6 593.4

HOTEL AND RESORT REITS

HST [] HOST HOTELS & RESORTS, INC. DEC 14.0 33.2 6.2 6.5 4.4 2.1 42.7 46.3 33.7 33.3 35.5 33.6 441.8 242.2 276.1 239.5 412.2 1216.0
PK PARK HOTELS & RESORTS INC. DEC 3.7 5.4 2.3 1.7 2.3 3.2 51.5 51.4 37.5 34.5 33.1 44.0 717.7 600.2 960.3 1063.9 804.6 808.1
PEB PEBBLEBROOK HOTEL TRUST DEC 0.7 1.0 0.6 0.6 0.6 0.4 43.6 41.1 38.0 42.2 37.1 36.5 NM 674695.6 NM NM NM NM
XHR XENIA HOTELS & RESORTS, INC. DEC 6.8 7.0 1.9 1.8 3.1 3.1 51.0 47.0 42.2 38.4 44.6 39.5 284.4 370.5 1164.1 1244.3 592.4 505.0
DRH § DIAMONDROCK HOSPITALITY COMPANY DEC 4.2 6.8 2.9 2.4 4.6 6.1 41.3 38.2 36.3 34.1 33.8 33.4 658.4 536.3 559.7 881.4 315.3 288.5

INDUSTRIAL REITS
PLD [] PROLOGIS, INC. DEC 1.3 1.6 2.4 1.4 1.4 2.4 31.9 31.7 31.3 30.1 33.5 36.5 3337.0 2071.4 941.6 2802.8 2925.7 1173.6
DRE [] DUKE REALTY CORPORATION DEC 2.3 2.0 2.8 3.5 6.7 9.1 37.5 39.3 36.5 36.1 34.6 45.4 1350.6 1991.6 1070.6 583.7 302.9 195.3
REXR REXFORD INDUSTRIAL REALTY, INC. DEC 1.3 3.5 2.7 5.9 0.9 1.1 21.7 25.9 24.8 28.5 32.9 34.3 4782.5 714.7 1072.5 421.0 NM 13869.9
EGP § EASTGROUP PROPERTIES, INC. DEC 0.9 0.9 0.7 0.7 0.8 0.8 48.2 51.0 50.7 55.7 60.7 64.0 NM NM NM NM NM NM
FR † FIRST INDUSTRIAL REALTY TRUST, INC. DEC 1.6 3.1 1.7 1.2 1.8 1.6 41.7 45.2 45.3 43.6 46.8 51.2 1330.4 537.7 1533.8 6785.1 1500.7 2084.6

OFFICE REITS
ARE [] ALEXANDRIA REAL ESTATE EQUITIES, INC. DEC 2.1 3.3 3.0 2.7 1.8 1.2 31.6 36.0 40.0 41.0 42.4 43.6 1102.4 745.5 1038.4 986.7 1377.3 4204.3
BXP [] BOSTON PROPERTIES, INC. DEC 3.2 4.7 3.1 3.5 2.8 1.5 61.6 61.0 59.6 57.3 55.9 54.5 969.6 542.6 879.6 840.2 1045.0 2057.7
VNO [] VORNADO REALTY TRUST DEC 4.4 6.1 3.4 4.3 7.0 3.7 54.7 49.9 47.8 62.7 63.1 51.6 397.6 344.2 371.2 696.8 408.0 212.7
KRC † KILROY REALTY CORPORATION DEC 1.9 2.5 1.0 3.0 1.5 1.2 41.7 42.6 43.7 41.1 37.2 38.2 994.1 522.3 21963.3 893.3 1768.4 2349.0
CUZ † COUSINS PROPERTIES INCORPORATED DEC 0.8 1.5 2.2 1.0 2.0 1.2 32.7 32.5 33.4 27.4 27.9 35.5 NM 2286.8 807.4 NM 757.5 7836.3

RESIDENTIAL REITS
AVB [] AVALONBAY COMMUNITIES, INC. DEC 1.2 0.8 0.5 0.6 0.7 1.0 42.6 41.3 39.9 39.8 41.4 40.9 6612.8 NM NM NM NM 37406.3
EQR [] EQUITY RESIDENTIAL DEC 0.5 0.2 0.1 0.1 0.2 0.5 42.3 42.9 47.5 44.9 45.9 45.2 NM NM NM NM NM NM
MAA [] MID-AMERICA APARTMENT COMMUNITIES, INC. DEC 0.2 0.1 0.2 0.2 0.3 0.3 41.6 43.5 41.5 41.5 40.6 40.4 NM NM NM NM NM NM
ESS [] ESSEX PROPERTY TRUST, INC. DEC 1.0 0.7 0.7 0.8 0.5 1.1 50.1 49.3 47.4 46.6 46.9 46.7 49893.9 NM NM NM NM 13994.9
UDR [] UDR, INC. DEC 0.1 0.4 0.3 0.8 0.1 0.2 54.3 55.9 53.4 48.3 51.3 45.9 NM NM NM NM NM NM

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

63 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 Current Ratio Debt/Capital Ratio(%) Debt as a % of Net Working Capital
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016
RETAIL REITS
SPG [] SIMON PROPERTY GROUP, INC. DEC 0.4 0.7 0.6 0.6 1.1 0.7 84.2 88.0 88.5 85.3 84.8 81.8 NM NM NM NM 17165.1 NM
O [] REALTY INCOME CORPORATION DEC 0.7 5.1 1.0 1.0 1.0 1.0 38.6 44.7 43.9 44.5 45.3 46.2 NM 850.1 NM 217697.5 NM NM
KIM [] KIMCO REALTY CORPORATION DEC 2.5 3.4 1.2 1.1 1.4 1.2 42.5 48.5 51.8 47.3 49.7 48.0 2140.4 1485.1 11486.1 12141.0 4026.4 9375.0
REG [] REGENCY CENTERS CORPORATION DEC 1.0 2.4 2.2 1.8 1.5 1.4 37.7 39.4 38.4 36.6 34.8 38.5 240244.2 1159.5 2023.5 2710.8 3889.0 3962.2
FRT FEDERAL REALTY INVESTMENT TRUST DEC 1.6 3.7 1.5 1.8 1.5 1.2 58.4 61.5 54.7 54.8 55.9 55.1 1867.1 503.3 2176.9 1574.0 2350.2 5938.2

SPECIALIZED REITS
AMT [] AMERICAN TOWER CORPORATION DEC 0.4 0.8 0.5 0.5 0.8 1.0 81.0 85.6 76.2 72.6 70.8 69.4 NM NM NM NM NM 33506.8
CCI [] CROWN CASTLE INC. DEC 0.6 0.6 0.6 0.8 0.9 1.4 71.1 66.7 62.9 58.6 56.2 61.5 NM NM NM NM NM 3321.2
PSA [] PUBLIC STORAGE DEC 0.8 0.7 1.2 1.0 1.4 0.6 42.5 22.3 17.3 13.4 13.8 4.0 NM NM 3293.2 11068.0 1204.3 NM
EQIX [] EQUINIX, INC. DEC 1.8 1.3 1.3 1.0 1.8 1.4 51.5 49.2 52.1 56.7 54.8 54.3 856.4 1777.2 1362.8 NM 850.3 1189.6
DLR [] DIGITAL REALTY TRUST, INC. DEC 0.6 0.6 0.9 0.7 0.6 0.6 42.1 41.9 48.7 50.5 43.8 53.2 NM NM NM NM NM NM

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 64

 Price/Earnings Ratio (High-Low) Dividend Payout Ratio(%) Dividend Yield(High-Low, %)
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016
DIVERSIFIED REITS
STOR STORE CAPITAL CORPORATION DEC 37 - 31 48 - 17 33 - 22 29 - 21 29 - 22 38 - 27 148 166 108 118 130 132 6.2 - 4.4 4.8 - 3.9 9.6 - 3.5 4.8 - 3.4 5.5 - 4.2 5.9 - 4.5
PSB
EPRT ESSENTIAL PROPERTIES REALTY TRUST, INC. DEC 40 - 25 66 - 17 41 - 21 57 - 52 NA - NA 117 205 153 90 1608 201 5.4 - 3.5 4.8 - 3.1 12.0 - 3.2 6.3 - 3.3 6.3 - 5.8 0.0 - 0.0
AAT § AMERICAN ASSETS TRUST, INC. DEC 85 - 58 104 - 45 58 - 47 102 - 76 72 - 61 64 - 48 247 218 135 262 170 141 4.6 - 3.1 3.7 - 2.5 5.6 - 2.3 2.9 - 2.3 3.4 - 2.7 2.8 - 2.3
WRE WASHINGTON REAL ESTATE INVESTMENT TRUST DEC 142 - 111 NM - NM 7 - 5 100 - 72 135 - 120 21 - 15 554 NM 25 371 466 72 3.5 - 2.5 5.7 - 2.6 6.9 - 3.7 5.3 - 3.8 4.7 - 3.7 4.0 - 3.5

HEALTH CARE REITS

WELL [] WELLTOWER INC. DEC 113 - 76 38 - 14 30 - 22 37 - 25 62 - 50 28 - 19 308 114 114 168 254 121 3.2 - 2.5 4.1 - 2.7 10.5 - 3.6 5.2 - 3.8 7.0 - 4.8 5.7 - 4.5
VTR [] VENTAS, INC. DEC 472 - 357 54 - 14 64 - 47 57 - 41 19 - 16 41 - 26 1402 212 267 275 61 158 3.9 - 2.8 3.9 - 3.0 18.7 - 3.5 5.6 - 4.2 6.7 - 4.8 5.1 - 4.3
PEAK [] HEALTHPEAK PROPERTIES, INC. DEC 40 - 30 48 - 26 419 - 298 13 - 10 38 - 29 30 - 19 129 190 1582 66 168 156 5.1 - 3.3 5.2 - 3.2 7.4 - 4.0 5.5 - 3.9 6.8 - 5.1 5.9 - 4.4
MPW † MEDICAL PROPERTIES TRUST, INC. DEC 21 - 18 30 - 16 25 - 18 6 - 4 17 - 15 18 - 11 98 132 110 36 113 97 8.1 - 4.6 5.7 - 4.8 8.3 - 4.4 6.5 - 5.0 8.2 - 5.8 7.9 - 6.8
OHI † OMEGA HEALTHCARE INVESTORS, INC. DEC 22 - 16 64 - 21 28 - 21 27 - 18 69 - 53 20 - 14 153 384 165 188 501 124 10.7 - 8.0 9.8 - 6.8 18.0 - 6.0 7.8 - 6.0 10.4 - 7.0 9.7 - 7.2

HOTEL AND RESORT REITS

HST [] HOST HOTELS & RESORTS, INC. DEC NM - NM NM - NM 16 - 12 15 - 11 27 - 23 19 - 13 0 NM 64 58 111 78 2.7 - 0.0 0.0 - 0.0 9.4 - 0.0 5.4 - 4.2 4.7 - 3.8 4.6 - 4.0
PK PARK HOTELS & RESORTS INC. DEC NM - NM NM - NM 23 - 15 15 - 11 2 - 2 46 - 43 0 NM 161 79 15 135 0.3 - 0.0 0.0 - 0.0 21.9 - 0.0 8.8 - 5.7 8.5 - 5.4 6.9 - 5.8
PEB PEBBLEBROOK HOTEL TRUST DEC NM - NM NM - NM 54 - 39 NM - NM 32 - 23 49 - 34 NM NM 188 910 124 172 0.2 - 0.2 0.2 - 0.2 14.6 - 0.2 6.1 - 4.3 4.9 - 3.7 5.6 - 4.0
XHR XENIA HOTELS & RESORTS, INC. DEC NM - NM NM - NM 47 - 34 15 - 9 25 - 18 25 - 16 NM NM 227 63 120 134 0.0 - 0.0 0.0 - 0.0 5.9 - 0.0 6.7 - 4.8 5.8 - 4.3 6.7 - 5.0
DRH § DIAMONDROCK HOSPITALITY COMPANY DEC NM - NM NM - NM 13 - 10 30 - 21 26 - 23 20 - 14 NM NM 56 117 109 88 1.4 - 0.0 0.0 - 0.0 14.8 - 0.0 5.7 - 4.5 5.0 - 3.9 4.7 - 4.2

INDUSTRIAL REITS
PLD [] PROLOGIS, INC. DEC 42 - 24 54 - 31 37 - 23 24 - 19 22 - 16 24 - 16 64 116 86 68 57 74 2.9 - 1.5 2.6 - 1.6 3.7 - 2.1 3.4 - 2.3 3.2 - 2.7 3.6 - 2.6
DRE [] DUKE REALTY CORPORATION DEC 29 - 17 51 - 32 30 - 21 28 - 23 7 - 5 33 - 21 46 118 74 76 17 82 2.3 - 1.6 2.7 - 1.7 3.6 - 2.3 3.4 - 2.4 3.3 - 2.7 3.2 - 2.5
REXR REXFORD INDUSTRIAL REALTY, INC. DEC 98 - 58 105 - 67 102 - 60 80 - 63 65 - 45 64 - 42 116 153 143 142 115 143 2.2 - 1.2 2.1 - 1.3 2.5 - 1.5 2.2 - 1.5 2.4 - 1.9 2.7 - 1.8
EGP § EASTGROUP PROPERTIES, INC. DEC 57 - 34 53 - 32 42 - 27 41 - 31 39 - 28 26 - 17 84 111 89 81 104 85 3.0 - 1.7 2.4 - 1.7 3.4 - 2.1 3.2 - 2.2 3.3 - 2.6 3.6 - 2.7
FR † FIRST INDUSTRIAL REALTY TRUST, INC. DEC 31 - 19 30 - 18 23 - 15 26 - 21 19 - 15 28 - 18 52 65 49 67 50 68 2.6 - 1.6 2.6 - 1.8 3.7 - 2.1 3.2 - 2.1 3.1 - 2.6 3.3 - 2.6

OFFICE REITS
ARE [] ALEXANDRIA REAL ESTATE EQUITIES, INC. DEC 57 - 41 29 - 19 52 - 36 37 - 31 84 - 68 NM - NM 115 69 124 102 190 NM 3.5 - 2.1 2.8 - 2.1 3.6 - 2.4 3.5 - 2.5 3.1 - 2.7 3.1 - 2.7
BXP [] BOSTON PROPERTIES, INC. DEC 39 - 28 27 - 13 42 - 33 36 - 29 48 - 40 44 - 33 135 79 128 101 114 131 4.9 - 3.0 4.4 - 3.2 5.5 - 2.7 3.5 - 2.7 3.3 - 2.3 2.5 - 2.0
VNO [] VORNADO REALTY TRUST DEC 95 - 67 NM - NM 4 - 4 39 - 30 130 - 85 25 - 18 268 NM 18 119 247 61 8.1 - 4.5 6.0 - 4.2 8.9 - 3.8 4.5 - 3.5 4.3 - 3.3 3.9 - 2.3
KRC † KILROY REALTY CORPORATION DEC 14 - 10 54 - 28 45 - 33 30 - 23 51 - 44 26 - 16 38 120 100 69 100 51 4.3 - 2.6 3.7 - 2.7 4.3 - 2.2 3.1 - 2.3 2.7 - 2.2 2.5 - 1.9
CUZ † COUSINS PROPERTIES INCORPORATED DEC 22 - 17 27 - 14 35 - 26 52 - 40 18 - 15 37 - 23 66 74 95 135 46 64 4.8 - 2.9 3.8 - 3.1 5.3 - 2.7 3.5 - 2.6 3.2 - 2.5 4.1 - 2.5

RESIDENTIAL REITS
AVB [] AVALONBAY COMMUNITIES, INC. DEC 35 - 22 39 - 21 39 - 30 27 - 22 31 - 27 25 - 21 88 107 107 83 88 70 3.4 - 2.5 4.1 - 2.6 5.3 - 2.8 3.5 - 2.7 3.8 - 3.1 3.3 - 2.9
EQR [] EQUITY RESIDENTIAL DEC 25 - 16 36 - 19 34 - 24 41 - 31 43 - 37 7 - 5 68 97 86 120 123 16 3.6 - 2.6 4.2 - 2.7 5.2 - 2.6 3.4 - 2.6 3.7 - 3.0 3.4 - 2.9
MAA [] MID-AMERICA APARTMENT COMMUNITIES, INC. DEC 49 - 27 67 - 39 45 - 30 54 - 44 39 - 33 41 - 31 89 181 125 190 122 117 3.0 - 1.9 3.4 - 1.9 4.7 - 2.7 4.2 - 2.8 4.3 - 3.4 3.8 - 3.2
ESS [] ESSEX PROPERTY TRUST, INC. DEC 48 - 30 38 - 21 50 - 35 45 - 37 41 - 34 39 - 31 111 94 116 124 104 99 3.5 - 2.3 3.7 - 2.3 4.6 - 2.4 3.1 - 2.3 3.4 - 2.8 3.0 - 2.6
UDR [] UDR, INC. DEC 123 - 76 250 - 145 79 - 61 58 - 44 92 - 78 35 - 30 292 659 209 170 273 107 3.6 - 2.4 3.9 - 2.5 4.9 - 2.8 3.4 - 2.7 3.9 - 3.0 3.6 - 3.1

RETAIL REITS
SPG [] SIMON PROPERTY GROUP, INC. DEC 25 - 12 42 - 12 27 - 21 24 - 19 30 - 24 39 - 30 105 130 122 100 115 111 7.2 - 4.0 6.3 - 3.8 19.1 - 5.6 5.8 - 4.2 5.3 - 4.2 4.8 - 3.5
O [] REALTY INCOME CORPORATION DEC 85 - 67 72 - 37 59 - 45 53 - 38 57 - 48 64 - 45 325 244 195 209 218 202 4.7 - 4.0 4.9 - 3.8 6.6 - 3.4 4.4 - 3.3 5.4 - 4.1 4.8 - 4.0
KIM [] KIMCO REALTY CORPORATION DEC 15 - 9 9 - 3 27 - 18 18 - 13 30 - 20 41 - 32 45 38 129 106 119 125 4.3 - 2.7 4.5 - 2.8 14.5 - 0.0 7.8 - 5.1 8.5 - 5.9 6.2 - 4.1
REG [] REGENCY CENTERS CORPORATION DEC 36 - 21 242 - 122 49 - 40 47 - 38 72 - 59 60 - 46 112 670 163 151 186 135 4.4 - 3.2 5.4 - 3.2 7.4 - 3.6 4.0 - 3.3 4.0 - 3.0 3.6 - 2.8
FRT FEDERAL REALTY INVESTMENT TRUST DEC 41 - 25 81 - 41 31 - 25 43 - 34 37 - 30 49 - 39 128 246 89 125 98 107 4.6 - 3.1 5.2 - 3.2 6.4 - 3.2 3.5 - 2.9 3.7 - 3.0 3.3 - 2.7

SPECIALIZED REITS
AMT [] AMERICAN TOWER CORPORATION DEC 53 - 35 71 - 47 56 - 37 60 - 48 57 - 38 59 - 42 88 114 85 109 94 104 2.5 - 1.9 2.5 - 1.7 2.4 - 1.6 2.2 - 1.5 2.3 - 1.8 2.3 - 1.7
CCI [] CROWN CASTLE INC. DEC 81 - 58 74 - 50 83 - 59 95 - 82 141 - 105 108 - 82 217 207 235 305 420 359 3.8 - 2.8 3.6 - 2.6 4.1 - 2.7 4.3 - 3.0 4.3 - 3.7 4.7 - 3.5
PSA [] PUBLIC STORAGE DEC 37 - 22 38 - 26 36 - 27 27 - 21 34 - 29 40 - 30 81 118 106 94 113 104 2.7 - 1.9 3.7 - 2.4 5.0 - 3.4 4.1 - 3.0 4.4 - 3.4 4.1 - 3.5
EQIX [] EQUINIX, INC. DEC 158 - 107 198 - 116 97 - 57 100 - 74 163 - 117 215 - 147 209 256 165 202 267 394 2.0 - 1.4 1.9 - 1.3 2.2 - 1.3 2.7 - 1.7 2.4 - 1.7 2.2 - 1.6
DLR [] DIGITAL REALTY TRUST, INC. DEC 29 - 21 159 - 107 57 - 43 102 - 81 127 - 97 51 - 33 81 348 172 281 288 142 4.1 - 2.6 3.7 - 2.7 4.2 - 2.8 4.0 - 3.2 4.1 - 3.1 4.0 - 3.0

Note: Data as originally reported. CAGR-Compound annual grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

65 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

 Earnings per Share($) Tangible Book Value per Share($) Share Price (High-Low, $)
Ticker Com pany Yr. End 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016 2021 2020 2019 2018 2017 2016
DIVERSIFIED REITS
STOR STORE CAPITAL CORPORATION DEC 0.99 0.84 1.24 1.06 0.90 0.82 18.71 18.77 18.54 17.25 16.07 15.17 37.13 - 30.02 40.11 - 13.00 40.96 - 27.35 31.05 - 22.51 26.58 - 19.65 31.44 - 22.01
PSB
EPRT ESSENTIAL PROPERTIES REALTY TRUST, INC. DEC 0.82 0.44 0.63 0.26 35.50 0.00 15.87 14.30 13.62 11.83 723.84 0.00 32.92 - 20.00 29.34 - 6.08 27.10 - 13.39 14.75 - 13.05 0.00 - 0.00 0.00 - 0.00
AAT § AMERICAN ASSETS TRUST, INC. DEC 0.47 0.46 0.84 0.42 0.62 0.72 19.95 20.55 21.30 16.76 17.45 17.44 40.83 - 27.21 48.15 - 20.15 49.26 - 38.94 42.85 - 30.62 44.83 - 36.79 46.38 - 34.07
WRE WASHINGTON REAL ESTATE INVESTMENT TRUST DEC 0.19 (0.20) 4.75 0.32 0.25 1.65 15.26 15.65 17.20 13.37 13.95 14.09 27.05 - 20.74 32.22 - 16.95 31.41 - 22.53 31.85 - 22.70 33.96 - 29.90 34.61 - 23.89

HEALTH CARE REITS

WELL [] WELLTOWER INC. DEC 0.78 2.33 3.05 2.02 1.26 2.81 38.15 37.33 36.65 35.09 35.67 36.67 89.80 - 59.38 89.99 - 24.27 93.17 - 66.82 74.75 - 49.58 78.17 - 63.06 80.19 - 52.80
VTR [] VENTAS, INC. DEC 0.13 1.17 1.17 1.14 3.78 1.87 23.40 23.50 24.07 23.97 25.58 24.43 61.09 - 45.40 63.38 - 13.35 75.40 - 54.59 65.70 - 46.55 72.36 - 58.96 76.80 - 46.87
PEAK [] HEALTHPEAK PROPERTIES, INC. DEC 0.93 0.77 0.09 2.25 0.88 1.34 11.12 11.54 11.53 11.81 10.42 10.83 37.69 - 28.15 37.64 - 18.63 37.93 - 26.80 30.27 - 21.48 33.67 - 25.09 40.43 - 25.11
MPW † MEDICAL PROPERTIES TRUST, INC. DEC 1.11 0.81 0.87 2.76 0.82 0.86 12.00 11.35 12.51 11.32 9.40 9.31 23.74 - 19.39 24.29 - 12.35 21.63 - 15.50 17.52 - 11.82 14.22 - 11.90 15.92 - 9.61
OHI † OMEGA HEALTHCARE INVESTORS, INC. DEC 1.75 0.70 1.58 1.40 0.51 1.90 13.61 13.79 15.28 13.82 14.65 16.36 39.31 - 27.06 45.22 - 13.33 45.01 - 33.39 38.34 - 24.90 35.14 - 26.43 38.09 - 26.96

HOTEL AND RESORT REITS

HST [] HOST HOTELS & RESORTS, INC. DEC (0.02) (1.04) 1.26 1.47 0.76 1.02 9.02 8.96 10.26 10.12 9.43 9.48 19.02 - 13.16 18.66 - 7.86 20.35 - 15.51 22.47 - 15.94 20.65 - 17.26 19.51 - 12.17
PK PARK HOTELS & RESORTS INC. DEC (1.95) (6.11) 1.44 2.31 12.21 0.67 18.64 20.55 24.41 24.84 24.97 16.32 24.67 - 15.77 26.01 - 3.99 33.02 - 21.68 34.27 - 23.91 31.46 - 24.65 33.40 - 28.44
PEB PEBBLEBROOK HOTEL TRUST DEC (1.80) (3.25) 0.63 (0.06) 1.19 0.64 24.13 24.93 27.75 27.32 21.36 21.91 26.45 - 17.57 26.98 - 5.39 34.35 - 24.51 41.65 - 26.59 38.96 - 26.21 31.85 - 20.51
XHR XENIA HOTELS & RESORTS, INC. DEC (1.26) (1.44) 0.49 1.75 0.92 0.79 12.48 13.60 15.18 15.69 14.54 14.54 21.40 - 14.15 21.80 - 6.15 23.33 - 16.67 25.90 - 16.47 22.76 - 16.21 19.87 - 12.10
DRH § DIAMONDROCK HOSPITALITY COMPANY DEC (0.96) (1.97) 0.90 0.43 0.46 0.57 7.19 8.15 9.55 8.89 9.02 9.08 11.49 - 7.88 11.79 - 1.96 11.52 - 8.76 12.99 - 8.70 12.08 - 10.43 11.61 - 7.28

INDUSTRIAL REITS
PLD [] PROLOGIS, INC. DEC 3.94 2.01 2.46 2.87 3.06 2.27 43.55 41.49 34.58 34.01 28.24 27.08 169.93 - 93.08 112.37 - 59.82 92.80 - 56.40 68.95 - 55.21 67.53 - 48.33 54.87 - 35.25
DRE [] DUKE REALTY CORPORATION DEC 2.25 0.80 1.18 1.07 4.58 0.88 15.58 13.59 13.38 12.68 12.47 9.55 66.22 - 37.61 43.45 - 25.19 36.04 - 24.88 29.48 - 24.30 30.14 - 23.93 28.99 - 18.52
REXR REXFORD INDUSTRIAL REALTY, INC. DEC 0.80 0.51 0.47 0.41 0.48 0.36 28.03 22.15 19.68 17.14 14.38 12.26 81.68 - 45.90 53.48 - 31.79 48.80 - 28.45 33.54 - 26.32 31.71 - 21.34 23.60 - 15.14
EGP § EASTGROUP PROPERTIES, INC. DEC 3.90 2.76 3.24 2.49 2.44 2.93 37.66 31.68 30.47 24.47 21.27 18.79 229.84 - 131.28 153.26 - 83.40 138.15 - 87.94 102.05 - 77.74 95.03 - 67.69 76.00 - 49.31
FR † FIRST INDUSTRIAL REALTY TRUST, INC. DEC 2.09 1.53 1.88 1.31 1.69 1.05 16.50 14.55 13.67 12.79 11.66 10.35 66.74 - 40.08 46.12 - 25.89 43.24 - 27.77 34.04 - 27.30 32.91 - 25.31 29.75 - 18.89

OFFICE REITS
ARE [] ALEXANDRIA REAL ESTATE EQUITIES, INC. DEC 3.82 6.01 3.12 3.52 1.58 (1.99) 98.58 82.40 71.06 64.20 58.10 52.50 224.95 - 154.37 179.79 - 109.22 163.51 - 110.66 131.00 - 109.04 134.37 - 106.89 114.67 - 70.69
BXP [] BOSTON PROPERTIES, INC. DEC 3.17 5.54 3.30 3.70 2.93 3.26 37.27 37.22 35.43 36.79 36.38 36.32 124.24 - 88.45 147.83 - 69.69 140.35 - 107.94 132.82 - 107.84 140.13 - 116.77 144.02 - 107.28
VNO [] VORNADO REALTY TRUST Earnings
DEC 0.53 per Share ($)
(1.83) 16.21 2.01 0.85 4.34 Tangible Book 30.42
25.55 27.84 Value per
18.04Share
17.30 ($)29.99 50.91 - 35.02 68.68 - 27.64 Share
70.54 Price (High-Low,
- 58.60 78.31 - 59.48$) 111.72 - 71.90 108.69 - 78.91
KRC † KILROY REALTY CORPORATION DEC 5.36 1.63 1.86 2.55 1.51 2.97 46.22 43.22 40.24 38.70 37.16 35.33 74.05 - 54.26 88.99 - 45.28 85.29 - 60.87 77.73 - 59.05 78.33 - 67.00 77.54 - 46.76
Ticker Company Yr. End 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012
CUZ † COUSINS PROPERTIES INCORPORATED DEC 1.87 1.60 1.17 0.75 2.08 1.25 29.58 28.80 27.94 24.91 24.56 22.40 40.70 - 31.01 42.99 - 21.15 41.37 - 30.76 39.52 - 30.12 38.52 - 31.24 45.60 - 28.36
DEPARTMENT STORES
DDS † DILLARDS
RESIDENTIAL REITS INC -CL A # JAN 4.93 6.91 7.79 7.10 6.98 53.41 49.98 49.02 45.33 41.24 88.58 - 54.37 144.21 - 65.14 126.83 - 82.75 97.87 - 75.33 89.98 - 42.54
KSS
AVB [] KOHL'S CORP COMMUNITIES, INC.
[] AVALONBAY # JAN 3.12DEC 3.487.19 4.28
5.89 4.08
5.63 4.19 6.35 7.52
7.05 29.75 78.3629.52
77.21 29.81
78.31 76.9728.33
75.43 27.24
74.23 254.6159.67 -
- 154.8433.87
229.40 - 79.60
118.17- 222.87
41.85 - 168.34
63.54191.91
- 48.68
- 152.6559.00 -
199.52 41.35 55.25 - - 158.32
- 169.50 192.29 42.04
EQR
M [] EQUITY
[] MACY'S RESIDENTIAL
INC # JAN 2.01DEC 3.263.54 4.30
2.45 2.60
3.93 1.77
3.29 1.63 11.68(0.24) 29.07 (0.52)
28.17 27.65
3.34 26.99 5.42
27.27 27.41
4.51 91.2045.50
- 56.79
- 87.53
29.94 - 73.61
45.43- 89.55
34.05 - 63.41
66.59 72.75
- - 54.9754.07
50.05 70.46
- - 59.49 42.17
36.35 81.76 - - 32.28
58.28
MAA
JWN [] MID-AMERICAINC
[] NORDSTROM APARTMENT COMMUNITIES, #
INC.JAN 2.05DEC 3.224.61 3.79
2.19 3.07
3.77 1.93
3.62 2.86 2.693.72 51.71 2.51
51.33 53.10
10.55 53.99 9.96
55.73 56.04
8.82 231.6362.82
- 122.15
- 148.88
35.01 - 83.16
82.00- 140.15
49.34 - 92.19
80.54104.98
- - 85.1663.72
54.90 110.95
- - 92.50 110.01
52.16 58.44 - - 46.27
82.91
ESS
JCP † PENNEY (J C) CO
[] ESSEX PROPERTY TRUST, INC. # JAN - DEC 7.51
(1.68) 8.69
(2.53) 6.66
(5.57) 5.90
(4.49)6.57 6.272.64 91.72 2.64
92.24 94.10
4.64 95.11 8.38
95.03 94.48
11.78 357.9011.99
- 226.79
- 329.74
6.00 - 10.09
175.81- 334.17
6.19 - 235.51 267.41
11.30 - -
4.90214.03 270.04
23.10 - - 6.24
218.41 240.55
43.18 - - 191.25
15.69
UDR [] UDR, INC. DEC 0.48 0.20 0.63 0.74 0.44 1.08 10.49 10.64 11.11 10.38 10.38 11.40 60.42 - 36.73 51.25 - 29.20 50.61 - 38.18 42.98 - 32.88 40.71 - 34.41 38.61 - 32.79
GENERAL MERCHANDISE STORES
† BIG LOTS INC
RETAIL REITS
BIG # JAN 3.37 2.83 2.49 2.17 2.96 14.70 14.67 14.92 15.66 13.00 56.54 - 33.78 51.11 - 37.41 51.75 - 25.50 39.22 - 27.42 47.22 - 26.69
SPG
DG [] SIMONGENERAL
[] DOLLAR PROPERTY CORP
GROUP, INC. # JAN 4.45DEC 3.966.84 3.50 3.59 6.81
3.17 7.872.87 6.24 5.87(0.48) 9.94 (0.56) 8.96 7.78
0.56 10.04(0.45)
11.04 12.72
(1.75) 171.1296.88
- 82.06
- 149.89 - 81.42
66.50 42.25- 186.44
59.75 - 142.40
71.78191.49
- - 145.7861.95
53.00 188.10
- - 150.15
39.73 229.10
56.04 - - 173.11
39.83
O
DLTR [] REALTY INCOME
[] DOLLAR TREE INC CORPORATION # JAN 3.80DEC 1.270.87 1.14
2.91 1.38
2.74 1.26
2.70 1.10 1.13
(13.58) 27.23 25.63
(18.26) 24.78
7.87 22.63 21.68
4.81 20.27
6.65 74.60 - 57.00
99.93 - 84.92
72.52 - 38.00-
84.22 82.17
60.31 - 61.59 66.91
71.53 - -
49.59 47.25 63.60
60.19 - - 52.85
37.70 72.30 -
56.81 - 50.47
37.12
KIM
FRED [] KIMCO
§ FREDS REALTY CORPORATION
INC # JAN NA DEC (0.20)1.60 (0.80)
2.25 0.80
0.71 1.020.81 0.87 0.79 NA 15.31 7.13 12.69 10.93
9.09 12.2210.79
12.02 10.62
11.67 24.9521.77
- 14.28
- 20.78 - 20.05
7.89 7.45- 21.86
11.27 - 14.32
21.05 18.37
- - 13.1618.93
13.07 26.16
- - 17.02
12.30 32.24 -
15.98 - 24.35
12.70
REG
OLLI [] REGENCY
§ OLLIE'S CENTERS
BARGAIN CORPORATION
OUTLET HLDGS # JAN 0.99DEC 0.622.12 0.26
0.47 1.43
0.34 1.46NA 1.00 1.42(0.44) 33.13 33.22
(1.98) 33.88
(5.43) 34.01 34.39
(4.88) 20.62
NA 78.07 - 43.49
32.75 - 64.65
16.13 - 31.80-
22.99 70.26
14.88 - 56.50NA 69.78
- - 54.87 NA
NA 72.05
- - NA
58.63 85.35
NA - - 65.16
NA
FRT FEDERAL REALTY INVESTMENT TRUST DEC 3.26 1.62 4.61 3.18 3.97 3.50 30.63 29.88 31.24 29.23 28.09 26.91 138.40 - 81.85 131.56 - 64.11 141.35 - 115.09 135.68 - 106.41 145.80 - 119.37 171.08 - 134.39
TGT [] TARGET CORP # JAN 4.62 5.29 3.86 3.10 4.57 19.23 21.06 21.39 25.08 25.31 84.14 - 65.50 85.81 - 68.15 76.64 - 54.66 73.50 - 58.01 65.80 - 47.25
SPECIALIZED
TUES REITS
§ TUESDAY MORNING CORP JUN 0.08 0.24 (0.24) (1.33) 0.09 5.10 5.00 4.66 4.85 6.24 9.23 - 4.40 22.88 - 4.86 22.82 - 11.82 16.44 - 6.26 6.86 - 3.12
AMT [] AMERICAN TOWER CORPORATION DEC 5.66 3.79 4.24 2.77 2.67 1.98 (63.62) (38.33) (30.35) (25.71) (26.07) (22.43) 303.72 - 197.50 272.20 - 174.32 242.00 - 153.93 168.58 - 130.37 155.28 - 102.51 118.26 - 83.07
CCI [] CROWN CASTLE INC.
OTHER COMPANIES WITH SIGNIFICANT MULTILINE RETAIL OPERATIONS DEC 2.53 2.35 1.79 1.23 0.80 0.95 (13.58) (11.72) (10.64) (9.69) (8.98) (5.13) 209.87 - 146.15 180.00 - 114.18 149.47 - 104.22 117.60 - 98.85 114.97 - 83.96 102.82 - 75.71
PSA
SHLD [] PUBLIC
SEARS STORAGECORP
HOLDINGS # JAN (20.78)DEC (10.59)
9.87 (15.82)
6.29 (12.87)
7.29 8.54
(8.78)6.73 6.81 (52.47) 28.16(38.81)
26.13 27.47
(31.00) 28.05 27.03 27.88
(14.06) (4.76) 377.3620.48
- 212.22
- 240.75 - 46.23
8.00 155.37- 266.76
18.03 - 193.89
51.06234.90
- - 180.4867.50
24.10 232.21
- - 192.15
38.88 277.60
85.90 - - 200.65
28.89
EQIX
WMT [] EQUINIX, INC.
[] WAL-MART STORES INC # JAN 4.40DEC 4.585.53 5.01 4.18 5.99
4.87 4.565.04 3.00 1.79 19.93 39.4720.1933.55 22.93
19.61 0.6117.550.67 16.859.25 885.2675.19
- 586.73
- 839.77 - 90.97
60.20 477.87- 609.97
56.30 - 343.58
88.09461.73
- - 335.2981.37
72.27 495.35
- - 355.18
67.72 391.07
77.60 - - 255.45
57.18
DLR [] DIGITAL REALTY TRUST, INC. DEC 5.94 1.00 2.35 1.21 0.99 2.20 24.24 19.77 14.86 6.39 13.91 12.82 178.22 - 124.65 165.49 - 105.00 136.32 - 100.05 125.10 - 96.56 127.23 - 98.03 113.21 - 69.89
Note: Data as originally reported. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the following calendar year.
J-This amount
Note: Data includesreported.
as originally intangibles that cannot beannual
CAGR-Compound identified.
grow th rate. []Company included in the S&P 500. †Company included in the S&P MidCap 400. §Company included in the S&P SmallCap 600. #Of the follow ing calendar year.
Souce: S&P Capital IQ.

The accuracy and completeness of information obtained from third-party sources, and the opinions based on such information, are not guaranteed.

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 66

 mentioned herein may not be suitable for all investors and
Disclosures this material is not intended for any specific investor and
CFRA’s Industry Surveys Reports (the “Industry Surveys”) does not take into account an investor's particular
have been prepared by Accounting Research & Analytics, investment objectives, financial situations or needs. Before
LLC and/or one of its affiliates. The Industry Surveys are acting on any recommendation in this material, you should
published and originally distributed by Accounting consider whether it is suitable for your particular
Research & Analytics, LLC d/b/a CFRA (“CFRA U.S.”), with circumstances and, if necessary, seek professional advice.
the following exceptions: In the United Kingdom/European
Union/European Economic Area, the Industry Surveys are CFRA may license certain intellectual property or provide
published and originally distributed by CFRA U.K. Limited services to, or otherwise have a business relationship with,
(company number 08456139 registered in England & certain issuers of securities that are the subject of CFRA
Wales with its registered office address at New Derwent research reports, including exchange-traded investments
House, 69-73 Theobalds Road, London, WC1X 8TA, United whose investment objective is to substantially replicate the
Kingdom), which is regulated by the U.K. Financial Conduct returns of a proprietary index of CFRA. In cases where CFRA
Authority (No. 775151); in Malaysia, the Industry Surveys is paid fees that are tied to the amount of assets invested in
are published and originally distributed by CFRA MY Sdn a fund or the volume of trading activity in a fund,
Bhd (Company No. 683377-A) and regulated by Securities investment in the fund may result in CFRA receiving
Commission Malaysia, No. CMSL/A0181/2007 (“CFRA compensation in addition to the subscription fees or other
Malaysia”). CFRA Malaysia is a wholly-owned subsidiary of compensation for services rendered by CFRA, however, no
CFRA U.S.. For Recipients in Canada: This report is not part of CFRA's compensation for services is tied to any
prepared subject to Canadian disclosure requirements and recommendation or rating. Additional information on a
may not be suitable for Canadian investors. subject company may be available upon request.

The content of this report and the opinions expressed CFRA's financial data provider is S&P Global Market
herein are those of CFRA based upon publicly-available Intelligence. THIS DOCUMENT CONTAINS COPYRIGHTED
information that CFRA believes to be reliable and the AND TRADE SECRET MATERIAL DISTRIBUTED UNDER
opinions are subject to change without notice. This analysis LICENSE FROM S&P GLOBAL MARKET INTELLIGENCE. FOR
has not been submitted to, nor received approval from, the RECIPIENT'S INTERNAL USE ONLY.
United States Securities and Exchange Commission or any
other regulatory body. While CFRA exercised due care in The Global Industry Classification Standard (GICS®) was
compiling this analysis, CFRA AND ALL RELATED ENTITIES developed by and/or is the exclusive property of MSCI, Inc.
SPECIFICALLY DISCLAIM ALL WARRANTIES, EXPRESS OR and S&P Global Market Intelligence. GICS is a service mark
IMPLIED, to the full extent permitted by law, regarding the of MSCI and S&P Global Market Intelligence and has been
accuracy, completeness, or usefulness of this information licensed for use by CFRA.
and assumes no liability with respect to the consequences
of relying on this information for investment or other Certain information in this report is provided by S&P
purposes. Global, Inc. and/or its affiliates and subsidiaries
(collectively "S&P Global"). Such information is subject to
No content (including ratings, credit-related analyses and the following disclaimers and notices: "Copyright © 2022,
data, valuations, model, software or other application or S&P Global Market Intelligence (and its affiliates as
output therefrom) or any part thereof (Content) may be applicable). All rights reserved. Nothing contained herein is
modified, reverse engineered, reproduced or distributed in investment advice and a reference to a particular
any form by any means, or stored in a database or retrieval investment or security, a credit rating or any observation
system, without the prior written permission of CFRA. The concerning a security or investment provided by S&P Global
Content shall not be used for any unlawful or unauthorized is not a recommendation to buy, sell or hold such
purposes. CFRA and any third-party providers, as well as investment or security or make any other investment
their directors, officers, shareholders, employees or agents decisions. This may contain information obtained from
do not guarantee the accuracy, completeness, timeliness or third parties, including ratings from credit ratings agencies.
availability of the Content. Reproduction and distribution of S&P Global’s information
and third-party content in any form is prohibited except
Past performance is not necessarily indicative of future with the prior written permission of S&P Global or the
results. This document may contain forward-looking related third party, as applicable. Neither S&P Global nor its
statements or forecasts; such forecasts are not a reliable third-party providers guarantee the accuracy,
indicator of future performance. completeness, timeliness or availability of any information,
including ratings, and are not responsible for any errors or
This report is not intended to, and does not, constitute an omissions (negligent or otherwise), regardless of the cause,
offer or solicitation to buy and sell securities or engage in or for the results obtained from the use of such information
any investment activity. This report is for informational or content. S&P GLOBAL AND ITS THIRD-PARTY CONTENT
purposes only. Recommendations in this report are not PROVIDERS GIVE NO EXPRESS OR IMPLIED WARRANTIES,
made with respect to any particular investor or type of INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF
investor. Securities, financial instruments or strategies MERCHANTABILITY OR FITNESS FOR A PARTICULAR

67 REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 INDUSTRY SURVEYS

PURPOSE OR USE AND ALL S&P INFORMATION IS to purchase, hold, or sell any securities or to make any
PROVIDED ON AN AS-IS BASIS. S&P GLOBAL AND ITS investment decisions. SE assumes no obligation to update
THIRD-PARTY CONTENT PROVIDERS SHALL NOT BE the Content following publication in any form or format.
LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, The Content should not be relied on and is not a substitute
EXEMPLARY, COMPENSATORY, PUNITIVE, SPECIAL OR for the skill, judgment and experience of the user, its
CONSEQUENTIAL DAMAGES, COSTS, EXPENSES, LEGAL management, employees, advisors and/or clients when
FEES, OR LOSSES (INCLUDING LOST INCOME OR PROFITS making investment and other business decisions. SE's
AND OPPORTUNITY COSTS OR LOSSES CAUSED BY opinions and analyses do not address the suitability of any
NEGLIGENCE) IN CONNECTION WITH ANY USE OF THEIR security. SE does not act as a fiduciary or an investment
INFORMATION OR CONTENT, INCLUDING RATINGS. Credit advisor. While SE has obtained information from sources it
ratings are statements of opinions and are not statements believes to be reliable, SE does not perform an audit and
of fact or recommendations to purchase, hold or sell undertakes no duty of due diligence or independent
securities. They do not address the suitability of securities verification of any information it receives. Valuations
or the suitability of securities for investment purposes, and services are opinions and not statements of fact or
should not be relied on as investment advice." recommendations to purchase, hold or sell any security or
instrument, or to make any investment decisions. The
Certain information in this report may be provided by information provided as part of valuations services should
Securities Evaluations, Inc. ("SE"), a wholly owned not be intended as an offer, promotion or solicitation for the
subsidiary of Intercontinental Exchange. SE is a registered purchase or sale of any security or other financial
investment adviser with the United States Securities and instrument nor should it be considered investment advice.
Exchange Commission (SEC). SE’s advisory services include Valuations services do not address the suitability of any
evaluated pricing and model valuation of fixed income security or instrument, and securities, financial instruments
securities, derivative valuations and Odd-Lot Pricing that or strategies mentioned by SE may not be suitable for all
consists of bid- and ask-side evaluated prices for U.S. investors. SE does not provide legal, accounting or tax
Municipal and U.S. Corporate Securities (together called advice, and clients and potential clients of valuation
valuation services). Such information is subject to the services should consult with an attorney and/or a tax or
following disclaimers and notices: "No content (including accounting professional regarding any specific legal, tax or
credit-related analyses and data, valuations, model, accounting provision(s) applicable to their particular
software or other application or output therefrom) or any situations and in the countries and jurisdictions where they
part thereof (Content) may be modified, reverse do business. SE has redistribution relationships that reflect
engineered, reproduced or distributed in any form by any evaluated pricing, derivative valuation and/or equity
means, or stored in a database or retrieval system, without pricing services of other unaffiliated firms with which SE
the prior written permission of SE. The Content shall not be has contracted to distribute to its client base. Pricing and
used for any unlawful or unauthorized purposes. SE and any data provided by these third-party firms are the
third-party providers, as well as their directors, officers, responsibilities of those firms, and not SE, and are produced
shareholders, employees or agents (collectively SE Parties) under those firms' methodologies, policies and procedures.
do not guarantee the accuracy, completeness, timeliness or Valuations services provided by SE and products containing
availability of the Content. SE Parties are not responsible for valuations services may not be available in all countries or
any errors or omissions (negligent or otherwise), jurisdictions. Copyright © 2022 by Intercontinental
regardless of the cause, for the results obtained from the use Exchange Inc. All rights reserved."
of the Content, or for the security or maintenance of any
data input by the user. The Content is provided on an "as is" Redistribution or reproduction is prohibited without
basis. SE PARTIES DISCLAIM ANY AND ALL EXPRESS OR written permission. Copyright © 2022 CFRA. All rights
IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED reserved.
TO, ANY WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM
FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE
CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR
THAT THE CONTENT WILL OPERATE WITH ANY
SOFTWARE OR HARDWARE CONFIGURATION.

In no event shall SE Parties be liable to any party for any

direct, indirect, incidental, exemplary, compensatory,
punitive, special or consequential damages, costs, expenses,
legal fees, or losses (including, without limitation, lost
income or lost profits and opportunity costs or losses
caused by negligence) in connection with any use of the
Content even if advised of the possibility of such damages.
Credit-related and other analyses and statements in the
Content are statements of opinion as of the date they are
expressed and not statements of fact or recommendations

INDUSTRY SURVEYS REAL ESTATE INVESTMENT TRUSTS / SEPTEMBER 2022 68