Phocas Financial Issues First Quarter Investment Outlook for REIT Market

ALAMEDA, Calif., Dec. 16, 2021 /PRNewswire/ -- Phocas Financial Corporation ("Phocas"), an employee-owned registered investment adviser specializing in equity REIT and small-cap value equity investing, today issued its Q1 2022 REIT investment outlook and commentary.

Phocas manages some $900 million, and has managed REIT, Small Cap Value, and Equity Income investment strategies since its founding in 2005. Phocas' Q4 REIT strategy highlights follow.

• Pricing of Industrial and Multifamily assets continues to rise, and demand is also increasing for grocery-anchored shopping centers as valuations become more attractive relative to other real estate sectors.
• We expect strong demand in the Apartment REIT sector to continue following strong 3Q21 company results and continued robust rent growth in October. Attractive household formation, along with low availability and high pricing of single-family homes suggest 2022 rent growth above historic averages.
• The latest COVID variant is another headwind for Office investors. That presents attractive opportunities for patient investors.
• Because of rising wages and labor shortages we expect labor pressure to remain a key concern for Health Care REITs in 4Q21 and into 2022.

Yolanda Foreman, President of Phocas, said, "As we continue a 13-year long bull market, cash flows from real estate – including where most of us live, work, shop, and secure our electronic data – deserve attention as an alpha source less correlated to broader equities. Should we really expect the bull market to last another thirteen years?"

James Murray, Portfolio Manager, commented on the outlook, "Entering the first quarter of 2022 investors should try to position their portfolios to offset inflationary effects and the continued geographic shift of workforces. Regarding REITs being able to adjust pricing rapidly to adapt to inflation, interest rate changes, and perceptions of economic health, consider the speed with which prices of hotel rooms can be changed.

We believe that real estate remains attractive, even when the FTSE NAREIT All Equity REIT Index, a prominent all-equity REIT index, is up more than 29% for the year through 11/30. We also continue to believe that Health Care deserves attention due to impacts of the Pandemic, including increased openings of medical office facilities. For example, dialysis centers in shopping centers can boost valuations of retail real estate. The question investors should be asking is 'Who thinks that any of those sectors is going to be shrinking soon?'"

About Phocas Financial

Phocas Financial Corporation was founded in 2005 and is based in Alameda, California. The firm is 100% employee-owned. Phocas' partners are William Schaff, Yolanda Foreman, James Murray, Steve Block, and Kevin Granger. The firm manages separate accounts and mutual funds for institutional investors, investment advisors, and individual investors. Phocas' client roster also includes several managers of managers working on behalf of large investors including significant U.S. public pension plans.

The firm currently manages three strategies: U.S. Small Cap Value equities; U.S. Equity Real Estate Investment Trusts; and U.S. Equity Income which invests in equities, fixed income instruments and preferred securities. The investment strategies at Phocas are designed to deliver attractive long-term returns with moderate risk and low turnover. Capacity constraint is a core value of Phocas. The team will cap assets under management in each strategy at levels designed to protect their ability to generate alpha for investors.

Contact Information

Investors
Yolanda Foreman
510-523-5800

Media
Yolanda Foreman
Phocas Financial Corporation
[email protected] 
510-523-5800

SOURCE Phocas Financial Corporation