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Barclays: Multifamily REITs Are Cooling Off


Barclays analysts are predicting a downturn in growth from the multifamily REIT sector, citing "lukewarm market reception," according to a report released Friday.

While the banks remains "constructive" on apartment fundamentals, “We think there is limited upside from here,” the report adds. 

Overall, Barclays expects a deceleration of 53 bps in the sector’s growth this year, with fewer REITs beating analyst estimates. According to data from Reis, effective rents grew 4.7% in 2015, GlobeSt reports.

By year's end, 232,000 new apartments are expected to hit the market. “As we move into peak leasing and turnover season during the second and third quarter, pricing power for the apartment REITs will be tested,” the report says.

Despite the projected slide, the bank still sees rent growth over 4% this year. "It could take a year or two of supply exceeding demand before rent growth normalizes to near inflation levels.” [GS]