Under the shadow of tariffs, the US stock market is turbulent, and REITs have become UBS's new favorite for hedging

Zhitong
2025.04.10 02:09
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UBS analysts pointed out that Real Estate Investment Trusts (REITs) have outperformed the market in an uncertain economic environment and are expected to continue leading. Data shows that the return rate of REITs is approximately 4 percentage points higher than that of the S&P 500 index. Due to the impact of tariff policies, the defensive nature of REITs makes them more stable. After Trump announced a suspension of certain tariffs, REITs' stock prices rose significantly, with UDR, Extra Space Storage, and Equity Lifestyle Property all experiencing notable gains

According to the Zhitong Finance APP, UBS analysts stated on Wednesday that Real Estate Investment Trusts (REITs) have outperformed the broader market and may continue to lead in an uncertain economic environment. UBS's analysis shows that as of Monday's close, the return on REITs for 2025 is approximately 4 percentage points higher than that of the S&P 500 index.

UBS noted that REITs began to outperform the U.S. benchmark stock index around March 4, when the Trump administration imposed tariffs on goods from Canada and Mexico and increased import taxes on products from China. Analysts indicated that REITs may continue to outperform the broader market as real estate may be more resilient to the impacts of tariffs compared to other sectors in the S&P 500 index.

UBS stated, "This is partly due to the defensive nature of the sector; they are backed by physical assets, have limited international risk exposure, and the impact from tenants should be delayed."

It remains unclear how U.S. President Donald Trump's trade policies will evolve. On Wednesday, he announced a 90-day suspension of certain tariffs.

UBS indicated that in such a turbulent environment, REITs with self-storage facilities and triple net leases (a leasing form where commercial tenants are responsible for property taxes, insurance, and maintenance costs) may be more stable than other options. Analysts suggested that single-family rental homes, coastal apartments, and manufactured housing may also perform steadily.

UBS noted that the outlook for tariffs and consumer slowdown could harm industrial tenants and weaken demand for warehouses and refrigerated space. Shopping malls and other retail properties may also face headwinds.

Following Trump's announcement on Wednesday to suspend certain tariffs, REITs rose alongside the broader U.S. stock market. UDR, a real estate investment trust that owns apartments (UDR.US), rose 8%, while Extra Space Storage (EXR.US), which rents out storage units, increased by 7%, and Equity Lifestyle Property (ELS.US), which owns manufactured housing communities and resorts, rose by 4%

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