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Quarter-End Insights

Our Outlook for Real Estate Stocks

Equity REIT fundamentals remain healthy, but per-share valuation premiums warrant selectivity.

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  • We believe equity REIT valuation premiums and persistent global economic uncertainty and volatility require REIT investors to be more cautious and selective.
  • We believe equity REITs have traded at premiums to our estimated fair value throughout 2012 based on attractive growth and income characteristics and solid operating and balance sheet fundamentals.  
  • Healthy capital structures and dividend payout ratios should allow equity REITs to maintain, and in many cases, increase dividends, even in an uncertain economic environment.
  • Favorable commercial real estate supply fundamentals and an improving economic environment continue to provide a boost to equity REIT operating fundamentals, cash flow, and underlying portfolio valuations.


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Philip J. Martin does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.