Global Public Equity – Quarterly Review


Property stock performance around the globe was mixed during the fourth quarter, with interest rates rising on the back of a US-China trade deal and optimism over improving economic growth

In the US, the Federal Reserve (Fed) appears to have made its final rate cut of this mini-easing cycle, and rate cuts are expected to be on hold for the foreseeable future. The Fed has indicated that any further rate cuts will be data dependent, and a significant change from the current steady employment growth will be needed with little to no inflation for the Fed to act further. However, despite the Fed cutting short term rates, longer term rates rose as the US and China agreed to a “phase one” trade deal where the US agreed to reduce tariffs and China agreed to purchase additional US goods, including agricultural products. Details were sparse but the market responded positively regardless.

We continue to see ample debt and equity capital for real estate assets

In Europe, the big news was in the UK, as the result of the December general election resulted in a market-friendly, Conservative-led majority that is expected to get Brexit completed. This led to strong returns during the quarter for UK property stocks. Despite the optimism from a potential Brexit deal, economic data in the region continues to be weak. This has caused the Bank of England and the European Central Bank to favor a more dovish stance.

In Asia-Pacific, social unrest continues in Hong Kong, though there appeared to be some signs of de-escalation toward the end of the quarter. Retail and hotels continue to feel the brunt of the effects, as retail sales continue to decline along with hotel revenue per available room. However, the phase one trade deal between the US and China should be positive for the region in 2020. On the positive side, demand for logistics assets in the region remains strong, with outlooks from some companies suggesting that there could be further cap rate compression in the coming year.

Despite the increase in interest rates during the quarter, we continue to see significant equityand debt issuance by REITs. This will give many companies more dry powder to acquire and grow earnings. We continue to see ample debt and equity capital for real estate assets, which should support property values and the property market cycle going forward.



Property stocks look set to benefit from their higher dividend yields and stable cash flows

Given the late-cycle nature of the markets, low interest rates, and central banks that are working to keep rates low, we believe property stocks are set to benefit from their higher dividend yields and stable cash flows. Further, we believe that the generally positive employment growth driving demand and robust capital markets will provide a good stock picking backdrop for our seasoned investment team.


  • Past performance is no guarantee of future results.
  • The views and opinions in the preceding Commentary are as of the date of publication and are subject to change.
  • There is no guarantee that any market forecast set forth in this presentation will be realized.
  • This material should not be relied upon as investment advice, does not constitute a recommendation to buy or sell a security or other investment and is not intended to predict or depict performance of any investment.
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  • NASDAQ is a broad based capitalization index-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The Dow Jones Industrial Average is the measure of the performance of 30 “blue-chip” stocks, considered the leaders of the market. The S&P 500 Index is an unmanaged index generally considered to be representative of the large cap segment of the market. The Russell 2000 Index is comprised of the smallest 2000 companies in the Russell 3000 Index, representing approximately 11% of the Russell 3000 total market capitalization. The Dow Jones Utility is price-weighted average of 15 utility companies that are listed on NYSE and involved in production if electrical energy. The MSCI World Index is free-float weighted equity index which include developed world markets. The FTSE EPRA/NAREIT (Europe Public Real Estate Association/National Association of Real Estate Investment Trusts) Index is a total return performance index of all equity REITs tracked by FTSE EPRA/NAREIT. The Indices are presented for illustrative purposes only and are not intended to imply Heitman’s past or future performance. The performance of the Indices assumes dividend reinvestment, but do not reflect transaction costs, advisory fees, custodian fees, trading costs and other costs of investment. Individuals cannot directly invest in any of the Indices described above.