REITs Are Down Bad—But Here’s What Private Multifamily Investors Should Be Watching
Public REITs are limping. Your opportunity is running.
If you’ve been watching the real estate headlines lately, the story seems simple: rising interest rates crushed valuations, REITs tanked, and investors ran for the exits. But dig a little deeper—and you’ll find something most people are missing.
Behind the headlines, the fundamentals are telling a different story.
While REITs have underperformed the S&P 500 by 48% since early 2022, same-store NOI is up 16.8% from pre-pandemic levels. In residential, industrial, and even retail, we’re seeing operating income soar, despite all the noise.
So what’s really going on?
The Problem Isn’t the Real Estate. It’s the Capital Stack.
Here’s the twist: public REITs are not failing because their properties are weak. They’re failing because the cost of equity capital has surged and their share prices are trading at a discount to NAV—by 10–20% or more in many cases.
This traps them in a kind of financial purgatory: they can’t raise capital efficiently, they can’t acquire aggressively, and they’re forced to sit out some of the best buying conditions in over a decade.
Meanwhile, highly leveraged private owners—especially those with variable-rate debt—are getting squeezed hard. The cost of capital has doubled or tripled. Debt maturities are looming. And for many, the math just doesn’t pencil anymore.
Where This Gets Interesting for You
If you’re a private investor with dry powder, this moment is tailor-made for you.
Here’s why:
- REITs can’t compete right now. Their capital is expensive. Yours is nimble.
- Private portfolios are distressed. The pressure is building on overleveraged owners, especially in multifamily.
- Pricing has corrected. Per Green Street Advisors, private real estate values have dropped 20–25% from peak, putting many sellers in a “must-sell” situation.
- The fundamentals are strong. Construction has slowed. Rents are stabilizing. And occupancy is near 93%.
In short: the buildings are fine—it’s the balance sheets that are broken. And that creates a unique window for strategic acquisitions in places like Richmond, Norfolk, and across Virginia’s high-growth corridors.
What Smart Capital Is Doing Now
The savviest investors I work with are doing three things right now:
- Sourcing distress at the ownership level, not the asset level. They’re not buying because a property is ugly—they’re buying because the seller’s debt terms are.
- Holding cash and relationships like gold. Brokers, lenders, and loan servicers are starting to whisper. When they do, you want to be the first call.
- Underwriting with realism, not fantasy. Gone are the days of pro forma dreams. Today’s winners are those who build resilience into every number.
Final Thought
REITs may be stuck in first gear—but that doesn’t mean you have to be.
This part of the real estate cycle favors those with clarity, capital, and conviction. The next 12 months won’t reward the loudest. They’ll reward the prepared.
And if you're looking to acquire in Virginia, this is exactly the kind of moment we’ve been waiting for.
The game is won before it’s played. Let me show you why.
Justin Ferguson is a Multifamily Specialist in Marcus & Millichap's Southern Virginia Office. He prides himself in helping corporate professionals, private investors, REITS, developers, and syndicators strategize and maximize their returns to grow their portfolios at faster, more efficient rates.