REITs could benefit from stock index split-off

S&P Dow Jones, MSCI plan to break out real estate into own sector Aug. 31

New York /
Jan.January 25, 2016 01:01 PM

Publicly traded real estate investment trusts could benefit from a decision by major stock indices to break out real estate securities into their own, separate sector.

While real estate companies are currently lumped in with major financial companies likes banks and insurers, the S&P Dow Jones Indices and MSCI stock indexes plan to split real estate away from those stocks starting Aug. 31.

The move is expected to lessen volatility for real estate securities and push up valuations, according to financial publication Pensions & Investments, with up to $100 billion potentially flowing into REITs as a result of investment managers adjusting their strategies to match market weighting.

“It will be a structural tsunami into REITs,” Michael Underhill, founder of asset manager Capital Innovations told P&I. “More money will be driven into REITs… and so valuations will continue to climb and there will be continued outperformance in the REIT space.”

Real estate stocks have not responded well to stock market volatility in the past several months, with companies taking sizable hits after market downturns in both August and earlier this month. [Pensions & Investments]Rey Mashayekhi


Related Articles

arrow_forward_ios
Todd and Julie Chrisley (Getty)
Reality stars Todd and Julie Chrisley report to prison
Reality stars Todd and Julie Chrisley report to prison
Vornado Realty Trust's Steve Roth
Vornado gets booted from S&P 500
Vornado gets booted from S&P 500
David Vigliano; Chip and Joanna Gaines (Getty, Vigliano Associates)
Literary agent sues Chip and Joanna Gaines
Literary agent sues Chip and Joanna Gaines
Vanguard's Mortimer Buckley, Compass' Robert Reffkin and BlackRock's Larry Fink (Getty, Vanguard, Compass)
Vanguard, BlackRock increase stake in Compass
Vanguard, BlackRock increase stake in Compass
Anywhere'sRyan Schneider and Angelo Gordon's Adam Schwartz and Josh Baumgarten (Anywhere, Angelo Gordon)
Here’s who’s in, and who’s out, of Anywhere’s falling stock
Here’s who’s in, and who’s out, of Anywhere’s falling stock
Erin Lichy (homegirl.co, Getty)
Elliman agent to star in “Real Housewives of New York” reboot
Elliman agent to star in “Real Housewives of New York” reboot
Compass' stock price over time (Source: CNBC)
A dollar deferred: Compass agents down millions on ’21 equity program
A dollar deferred: Compass agents down millions on ’21 equity program
From left: Pamela Liebman and Glenn Kelman (Photo Illustration by Steven Dilakian for The Real Deal with Getty Images, Corcoran, Redfin)
Pam Liebman and Glenn Kelman want to buy your house – on TV
Pam Liebman and Glenn Kelman want to buy your house – on TV
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...