Private real estate managers and their investors are seizing opportunities in the public markets amid the chaos caused by US President Donald Trump’s tariff policies.

Public REIT shares, like the rest of the markets, have whipsawed since Trump’s decision to roll out and then pause widespread tariffs on most US trading partners. The FTSE NAREIT All Equity REITs index, which tracks publicly traded US REITs, fell 10.3 percent from April 2 to April 9, before regaining some of those losses this week. The index closed Thursday down 3.5 percent from its April 2 close.

The volatility has proven enticing to some private real estate managers and investors, who see an opportunity to buy assets at a discount – at a time when underwriting assets has become difficult and borrowing costs have risen, lessening the appeal of private real estate.

“We saw four of our larger, more sophisticated global relationships reach out to us to make an incremental and tactical investment in the asset class,” said Patrick Wilson, portfolio manager at Philadelphia-based CenterSquare Investment Management, adding that the investors included state and corporate pension plans.

Others, like Madison International Realty, see a chance to serve as a private lender to REITs who need capital but who do not want to issue new stock because it is trading at a discount, and doing so would dilute shareholder value.

“We’ve provided private capital to public REITs that are struggling to raise money with their own stock,” said Madison founder and president Ron Dickerman. “That’s probably more likely where you would see Madison as a player.”

One drawback of the tariffs for US REITs is that take-privates are likely off the table for the foreseeable future, said Michael Bluhm managing director at New York-based placement agent Jefferies Private Capital Group. Sellers will likely be unable to convince their boards they are receiving the maximum value, and would-be buyers will be hesitant to finalize a deal if they are unsure of hitting their return targets in the allotted time. The outcomes of two REITs currently in the market – Aimco and WashREIT – could be indicative of investor sentiment.

“Both those are coming to the latter part of their processes, so it will be interesting to see if they print anything” he said. “I suspect probably not.”

The rising cost of capital is dragging on REIT stocks, said Dickerman, as the 10-year treasury rate has risen roughly 40 basis points since April 3, hovering near 4.3 percent as of Friday after peaking at 4.5 percent before news of the pause.

But the NAREIT decline pales in comparison to the roughly 13 percent decline of both the NASDAQ and S&P 500 from April 2 to April 8, and which both closed Thursday down roughly 7 percent from before the ‘Liberation Day’ announcement. REIT shares tend to be buoyed by the relatively insular nature of real estate assets and long investment timeframes, and most involve assets that benefit from light capital expenditures, making them less vulnerable to rate increases than value-add and opportunistic strategies.

“You already have your asset in place, so your discount to replacement cost is greater,” said Wilson.

Discounted opportunities

S&P Global, which tracks REIT stock performance, reports that US REIT stocks were already trading at a discount relative to their net asset value before the tariff announcement, and their prices have only plunged since. REITs were trading at a median discount of 16.5 percent at the end of March, up from 13.7 percent from February.

According to S&P, US REIT stocks plummeted across sectors the week of April 4. Self-storage REITs were the least impacted, falling 5.44 percent, while office REITs tumbled the most at 11.1 percent, narrowly beating out industrial REITs, which fell by 10.7 percent.

Last week saw stabilization and a rebound for some sectors, though they remain below their pre-tariff performance. Hotel REITs saw their performance improve 1.3 percent and retail REITs improved by 0.3 percent. Industrial REITs fell another 3.2 percent and office REITs fell 1.9 percent.

The trick to finding value is figuring out where the markets are wrong, said CenterSquare’s Wilson.

“We have really been targeting areas where we see mispriced risk – essentially, where the market has priced in a perceived risk that we don’t believe is truly valid,” said Wilson. “A good example would be punishing retail REIT names in aggregate versus just the names where tariffs on apparel, accessories, electronics, etc, would impact the tenants within the REIT asset portfolios.”