The ALPS Active REIT ETF (REIT ) surged 10.4% year-to-date through mid-February, marking a sharp reversal for real estate investment trusts after ending 2025 down 0.68%, according to a Tuesday webinar, REITs are Recovering: Here’s What to do Next, hosted by SS&C ALPS Advisors.
The turnaround represents a major shift for a sector that lagged equities by roughly 10% over the past five years, according to Karl Zeller, senior investment specialist at SS&C ALPS Advisors. As of February 2026, REITs are now outperforming equities by nearly 10% year-to-date. Meanwhile, technology stocks and the Nasdaq have struggled.
The REIT recovery is backed by a reset in property values and changing market conditions, according to the February strategy session. REITs currently trade at about a 20% discount compared to private real estate funds. This creates an opportunity for investors who may be under-allocated to the space. Excluding the premium-priced health care sector, the rest of the REIT market is trading at a rarely seen 21% discount to net asset value.
A major factor driving the rebound is the lack of new construction, according to the webinar. Rising replacement costs have made new development too expensive, leading to a decline in new supply. Industrial supply has dropped 70% while apartment supply has fallen 30% from their 2023 peaks, according to the presentation. This hands pricing power back to existing landlords and supports higher rents.
Institutional investors are also beginning to rotate away from concerns about an AI bubble and toward income-producing real assets, according to the presentation. The broader REIT market offers a dividend yield of 3.98% compared to just 1.09% for the S&P 500, according to SS&C. REIT provides a 3.21% trailing twelve-month yield.
Active Management Captures REIT Recovery
REIT is positioned to benefit from the rebound through its high-conviction, active approach, according to Nick Tannura, chief investment officer and portfolio manager at GSI Capital Advisors. Unlike passive index funds that may hold troubled sectors, the actively managed fund focuses on areas with strong demand.
The fund maintains exposure to data centers. These have been a top-performing property type early this year as they support the physical infrastructure needed for artificial intelligence, according to the webinar. Health care remains the fund’s largest sector allocation at 17.7%, benefiting from earnings growth in senior housing.
The strategy also avoids major exposure to distressed office properties, according to the presentation. While many investors fear real estate due to office vacancies, the office component of the REIT universe has shrunk to just 3% of the market. The fund maintains a disciplined underweight to this area.
As the property cycle enters the early stages of a growth recovery, the active strategy provides a liquid way to capture what the webinar described as a “reversion to the mean” opportunity that is already playing out in 2026. The fund offers advisors exposure to a sector trading at rarely seen discounts with an asymmetric risk profile.
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