Ji Zhang, portfolio manager for global real estate at Cohen & Steers, was a guest on the latest episode of Nareit’s REIT Report podcast. Zhang spoke about her firm’s recent entry into the active exchange traded fund space, including the Cohen & Steers Real Estate Active ETF.
Zhang explained that the ETF is designed specifically to invest in “high conviction ideas” in U.S. REITs, while opportunistically investing in international and other real estate-related securities. “The ultimate goal is to provide total return and portfolio diversification,” she said.
The backdrop for REIT fundamentals is “quite healthy,” supported by steady demand and meaningfully below-trend supply, Zhang said.
Meanwhile, “REITs are trading at historic discounts relative to equities. In my experience, REITs have historically outperformed following discounts of this magnitude,” Zhang said. “At the same time, we also think that the public players within the real estate space are gaining the cost of capital to start acquiring assets accretively to generate more value,” she added.
In terms of sectors, Cohen & Steers is notably positive on health care, and senior housing in particular.
“We do think that the listed players have an increasing competitive advantage through their scale, through their operational efficiency. They're doing what the apartment companies did years and years ago in terms of using data and systems to really not only maximize revenue, but also think about operational efficiency and how to increase margins,” Zhang said.
Meanwhile, on the policy side Cohen & Steers is monitoring the impact of tariffs and immigration, Zhang noted.