Hello, I'm Todd Kellenberger, Client Portfolio Manager for the Principal Real Estate Securities team. Investor confidence towards real estate markets is rising due to anticipated interest rate cuts, creating favorable conditions for REITs to continue their recovery. We foresee either a U.S. soft landing or a mild recession, both of which are supportive for REIT market performance. In many markets globally, we expect a reduction in the cost of capital through lower rates to help spur a potential recovery in property values.

After a rally in public REIT stocks this past year, we believe momentum remains behind the market. But any rate volatility could create ups and downs for REITs in the short term. The direction of rates will always be key for this long duration asset class, but supply and demand trends for space are of great importance. Property fundamentals and cash flow growth matter. And our focus today is identifying opportunities that offer predictable and attractive cash flow growth.

Demand from secular growth trends, like demographics for U.S. senior housing, are a good example. Additionally, the current slowdown in new construction activity in many property sectors will result in lower supply in the years ahead, another tailwind for REIT earnings growth. If you'd like to connect with us about adding listed REITs exposure to your portfolio, please reach out to your Principal contact. We look forward to speaking with you.