While implied cap rates for the REIT market saw little change in Q2, one sector demonstrated significant strength-apartments. Although undervalued by public markets earlier in the year, this sector remains a conviction buy for private market investors.
The significant bid for multifamily across private markets provides a floor for apartment valuations in the public market. As a function, the apartment sector has meaningfully outperformed the REIT market as cap rates across the sector compressed over 50bps during the last quarter. With buyers and sellers seemingly coming back to the table at 5.0-5.5% cap rates so far this year, the sector might be nearing price discovery in the private market.
Examining cap rates in both the listed and private real estate markets, our Q2 2024 REIT Cap Rate Perspective Full Report offers valuable insights into the trajectory of pricing across core and alternative sectors, presenting key data points to illuminate market dynamics.
