How Vaccine Rollout Impacts Outlook for REITs

How Vaccine Rollout Impacts Outlook for REITs
Sarah Borchers…
Jan. 8 2021


Nareit’s Calvin Schnure says REIT sectors hardest hit have the potential to outperform.


The outlook for REIT stock performance in 2021 continues to hinge on the course of the pandemic and the roll-out of vaccines, but all indications point to a continued improvement in REIT operating performance and stock values throughout the coming year, according to Nareit Senior Economist Calvin Schnure.

While the early rollout of vaccines has been “disappointingly slow,” Schnure noted that most experts anticipate that by the end of the year people will be able to resume those activities hindered by the pandemic. “You’re going to see a continuing recovery in operating performance and earnings, and that should help lift the stock values,” he said.

Those sectors hardest hit early on by the pandemic, including retail and lodging, “may well outperform the market by quite a bit as we get back to normal. I think you’re going to be seeing much stronger demand for that type of real estate as we get further and further into the new year,” Schnure said.

The development of vaccines has eliminated a lot of the downside risks for real estate, according to Schnure.

“We’ve seen a pretty strong rally, especially in the REIT sectors that had been most impacted by the crisis early on,” Schnure said. He noted that lodging REITs, which had a total return of over 50% in the fourth quarter, are still down for the year. However, “this is showing that the vaccine is helping the economy, and in particular helping real estate get closer to pre-pandemic operational procedures. That’s really good for the outlook for REITs and for real estate,” he said.

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