May 3, 2023
 min read

Public REITs Are Not Real Estate

If you think that owning shares in a New York Stock Exchange-listed public REIT is filling your real estate allocation bucket, you are wrong.

If you think that owning shares in a New York Stock Exchange-listed public REIT is filling your real estate allocation bucket, you are wrong. Listed REITs exhibit large price swings (volatility) and often trade at share prices totally disconnected from the REIT’s underlying real estate value. Investors place bets on this volatility and disconnect by shorting listed REITs.

Real estate is supposed to be a safe haven, shielding investors from public market volatility. Listed REITs fail tremendously in this regard.


The Vanguard Real Estate Index Fund (ticker: VNQ) is a $60B listed REIT index fund. As an index fund, VNQ invests in all listed REITs proportional to how large each of these listed REITs are in relation to one another; VNQ mirrors the overall listed REIT universe as a whole.

We tracked VNQ’s yearly “high” and “low” prices for the 5 years ending December 31, 2022. We measured the percentage difference between each year’s “high” price as compared to each year’s “low” price. How much higher, on a percentage basis, was the high price compared to the low price?

We then did the same exercise for the Dow Jones Industrial Average, comparing each year’s high and low values. Below are the results of this research. We were astounded to discover that VNQ’s measurement of annual volatility exceeded DJI’s by a considerable margin.


Most listed REITs are tracked by Wall Street analysts. These analysts are typically employed by large investment firms that provide analyst research as a service to their clients. Part of the analysts’ exercise is to determine a REIT’s “net asset value” (NAV) per share.  What is the private market value of all of the REIT’s assets (i.e., real estate appraised values), minus all liabilities, divided by the number of shares?

In a perfect world, and in a perfect public stock market, a listed REIT’s share price would equal the analysts’ NAV per share calculation.

This is not the case. Do you think that apartments are a hot real estate asset class? As of April 28, 2023, listed apartment REITs traded at a -15% discount to NAV. How about single-family rental REITs? -9% vs. NAV. Office REITs? -40% vs. NAV (ouch). The disconnect is crazy.

How about Elevate Money’s real estate asset classes; how are the public markets treating our real estate investment choices?

Elevate.Money REIT I focuses on single-tenant, net-lease (STNL) commercial real estate.

STNL listed REITs were trading at +5% vs. NAV as of April 28.

Our Future of Housing Fund focuses on manufactured home (residential) communities.

Manufactured Home Communities listed REIT = +2% vs. NAV as of April 28.

This disconnect between listed REIT share prices and analysts’ NAV per share calculations is another example of why public market listed REITs are not an accurate reflection of real estate values.


An investment strategy known as “shorting” is a bet that a stock’s share price will go down, not up. A vibrant investment community exists focused on shorting listed REIT stocks. Given the high volatility, coupled with the disconnect between share price and NAV, it’s no wonder that billions of dollars of short bets are currently outstanding in the listed REIT world. This too is nuts; there is no “shorting” analogue in the private, non-listed real estate world.


No one should put 100% of their investment eggs into one basket. Prudent investors allocate investment dollars to stocks, bonds, real estate, commodities and so on. But if you are thinking that investing in NYSE-listed REITs is filling your real estate allocation, we believe that this is incorrect for the reasons cited above.

So how does the average investor find real estate, if not through listed REITs? That’s why we created Elevate.Money. A seamless, easy way to put real estate investment dollars to work. Our real estate team has 100 combined years, and billions of dollars, of real estate investment experience. Check us out at

Harold Hofer is a Co-Founder and CEO of Elevate Money.

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