Market Commentary | October 22, 2025

Changes

Since 2018, Simon Bowler has produced the data-laden report, which we call The State of REITs, monthly (it’s published elsewhere but resides on the 2MC website for your easy access). Early in the process of gathering numbers for the October edition, he noted that the long-observed higher multiples in favor of large caps had broken, and that shares were now trading more independently of size. Looking closer, it got stranger still.

In the Industrial REIT sector, for example, Plymouth Industrial (PLYM, small cap) has traded at a price/FFO multiple much lower than the peer average and a huge discount to Net Asset Value. In late August, however, PLYM received a non-binding buyout offer at a slight premium to its NAV and has traded near that bid ever since.

Conversely, Americold Realty (COLD, large cap) was a pandemic darling in the logistics/supply chain frenzy. Investors extrapolated the COVID-era inventory management panic and bid COLD shares to premiums in both price/FFO and NAV. As business regained its composure, COLD shares began a long slide to now be priced at FFO and NAV discounts to sector peers. Our theory is that the selloff was exacerbated and overdone by large institutional holders like Cohen and Steers and Norges Bank hastily exiting their outsized positions into a market of few interested buyers.

On October 15th, Prologis, Inc. (PLD, mega-cap), the logistics/industrial/data center/energy bellwether, reported strong 3Q earnings results and forecast strong demand and rent growth. Rexford Industrial (REXR, large-cap) and First Industrial (FR, large-cap) followed with similarly optimistic reports. The industrial real estate sector seems to have survived the excesses of the supply chain panic and is again on sound operational footing. Efficient markets will, eventually, price sector components appropriately.

Investors will do well to turn and face the strange, keep an open mind about valuations, and try to clearly see where opportunity exists and where it no longer does. If your value expectations are realized, sell and move on to more promising pursuits.

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