For REITs, getting own S&P 500 category could be a boon

RE stocks will no longer be grouped with banks and insurers as of Thursday

Aug.August 31, 2016 04:00 PM

From the New York website: As of Thursday, real estate investment trusts will no longer be grouped with banks and insurers in the MSCI and S&P 500 stock indices. Instead, they will become their own category, in a move that could impact how certain funds invest in the sector.

“There is going to be more money looking at the sector,” Matthew Norris of London-based real estate firm Grosvenor Group told the Wall Street Journal. “This is going to bring real estate into focus.”

REIT returns have outperformed the S&P 500 over the past 25 years, but so-called generalist funds that invest in a basket of stocks have allocated a comparatively small portion of their money to REITs. Separating real estate stocks from banks could draw more attention to that fact and spur investment in REITs, analysts at Jefferies International said.

The separation could also make real estate stock prices less volatile. Bank stocks tend to experience great price swings, and by being grouped with them, REIT stocks often see some of that volatility spill over.

“We don’t think things will change dramatically on Sept. 1, or the second, but there will certainly be more people looking at this sector over the long term,” said Philip Charls, CEO of the European Public Real Estate Association. [WSJ]Konrad Putzier

Related Articles

The Homewood Suites by Hilton in Chicago (Credit: Google Maps)

Hilton, Marriott and Hyatt-focused hotel REIT closes $1B refi amid industry growth

Macerich executives Tom O'Hern and Scott Kingsmore and a rendering of co-working space at One Westside

Macerich’s tough Q1 comes amid store closures, redevelopment plans

Investors show strong demand for data center properties

Specialty REITs record big gains and attract big dollars

St. Regis resort in Aspen to become first U.S. single-asset REIT

Top 10 US malls haven’t gotten the memo that malls are dying

Sold out from under them? SAFE buys land underneath DLJ and Clarett’s Eastown development for $142M

Aimco buys back full ownership of La Brea apartments for $451.5M