Nonetheless, in a report for July, Cohen & Steers makes a case for owning US REITs. According to the fund management company, in the US, the supply of various asset classes has fallen, curtailed by tight financial conditions. The US Federal Reserve Board raised its Federal Funds Rate (FFR) from 0%–0.25% as at end-2021 to 5.25%–5.5% by July 2023, in the most accelerated rate hike pace in living memory. As a result, [construction] starts as a percentage of stock has fallen to low levels. For instance, for industrial property, starts are down 50.1% from the peak in 2022 to only 1.6% of stock. Similarly, multi-family starts are down 48.7% from their 2022 peak to 2% of stock.
Cohen & Steers Capital Management has been weaving in and out of Digital Core REIT (DC REIT) this year. After paring its stake on May 31 by selling 398,500 units on the market for an average of 58.03 US cents (79.12 cents), the fund manager bought back units on June 25, and divested units on June 27. As at end-June, Cohen & Steers’ stake in DC REIT is down to 6.91% from a high of 7.05% during the month.
