Sher Hafeez, senior managing director of JLL’s M&A and corporate advisory group, was a guest on the latest episode of Nareit’s REIT Report podcast.
Hafeez discussed how REITs are trading at a premium to net asset value, with certain sectors, including health care, data centers, and office accounting for the lion’s share of that premium.
Many of these sectors are taking advantage of this cost of capital benefit and have issued equity to shore up capital to be on the offensive in 2025, Hafeez said. “I’d expect REITs to be pretty active acquirers compared to the last couple of years,” he added.
Hafeez also noted that the premium to NAV enjoyed by top performing REITs versus their sector peers has increased “quite drastically.” In a lot of cases, this could lead to strategic transactions and merger activity, he said.
Looking more broadly, Hafeez noted that “it's a volatile environment in the marketplace and continues to be, but we're seeing a lot of tailwinds and green shoots out there.” Institutional equity participation has increased over the past few quarters, while core funds and sovereign wealth funds are starting to come back “in some force,” alongside an improvement in the fundraising environment.