Exchange-Traded Fund Betting on Eventual Property Sector Turnaround Gets Quick Challenge
Summary:
VanEck’s new exchange-traded fund (ETF) tied to office real estate investment trusts (REITs) faced an immediate setback when one of its holdings, W.P. Carey, announced its exit from the office sector, causing a 7% drop in the ETF’s share values just one day after its launch. Despite this setback, some industry experts, such as Sher Hafeez from JLL Securities, remain optimistic about a potential long-term rebound in office REIT valuations. VanEck maintains its confidence in the office sector’s recovery prospects, emphasizing the benefits of its ETF structure for diversified exposure to the category. The office sector faces challenges, but it also presents opportunities, with signs of improved performance in certain segments and shifting investor attitudes.
“More large employers are beginning to require employees to return to the office, even if on a part-time basis, recognizing the benefits of in-person collaboration,” Regal said. “However, the office real estate segment has continued to experience extreme negative sentiment” from investors.