REIT Cap Rates vs. Corporate Bond Yields

The spread between corporate bonds and real estate has widened since COVID. In prior downturns, this spread has signalled attractive near term returns in the REIT market.

Evergreen believes this spread will revert closer to the mean for most sectors. However, retail and office sectors present unique, secular demand changes. We suspect the cap rate spreads in these sectors will remain wide for the near to mid-term.

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