Deep Dive: REIT sector focus matters even as sharp discounts abound

Focus on areas with strong rental growth

Real estate investment trust (REIT) investors have been urged to be selective about their property sector exposure, even as the space abounds with bargains.

A series of interest rate hikes in the last two years has affected all industries, but the real estate sector has been among the hardest hit as higher rates have led to increased borrowing costs for REITs, posing performance challenges. "The increased bond yields of the last couple of years, which act as benchmark reference yields against which property is valued, resulted in varying degrees of net asset value (NAV) declines of REITs," said Richard Parfect, portfolio manager at Momentum Global IM.  "Furthermore, it acted as a hit to sentiment which resulted in some significant decline...