REITs outperform private study

A 26-year pension-fund study found U.S. listed real estate investment trusts beat private real estate on long-term net returns. (reit.com) CEM Benchmarking’s 2026 study covered 462 public and private sector pension plans from 1998 through 2023, with 135 plans in the 2023 sample representing more than $3.8 trillion in assets. Listed equity REITs posted a 9.72% average annual net return, versus 8.00% for total private real estate on the study’s adjusted basis. (reit.com) The same study said REITs outperformed most private real-estate styles, trailing only internally managed direct real estate, which returned 10.08% a year. Core funds returned 7.97%, value-add and opportunistic funds returned 8.89%, and fund-of-funds vehicles returned 5.94%. (reit.com) REITs and private real estate moved closely together once CEM adjusted private-market data for reporting lags, with a 0.90 correlation in annual returns. CEM said that lag adjustment matters because private assets are appraised and reported later than public securities trade. (reit.com) The timing has drawn attention because public REIT prices have also been rising in 2026. Principal Asset Management said the FTSE Nareit All Equity REIT Total Return Index reached a record high on April 17, 2026, after 1,078 trading days without a new high. (principalam.com) Principal also said implied cap rates for REITs were near 5.8% in April 2026, versus 4.3% in December 2021. A cap rate is a property yield measure, and a higher implied cap rate usually signals a cheaper valuation relative to income. (principalam.com) The study was sponsored by Nareit, the industry trade group for REITs, and Nareit has used it to argue for a larger role for listed real estate in institutional portfolios. That sponsorship does not change the reported sample size or return figures, but it does mean the findings are being promoted by a party with a stake in the asset class. (reit.com) The comparison also does not settle every portfolio debate. CEM said internally managed direct real estate matched or slightly beat REITs over the full period, but added that only large pension plans typically have the staff and scale to run direct property portfolios efficiently. (reit.com) For investors choosing between public and private real estate, the new argument is less about whether the assets are related and more about which wrapper delivered better net results over 26 years. In CEM’s data, the listed wrapper won that comparison. (reit.com)