Within commercial real estate, COVID-19 created headwinds for some property types and tailwinds for others, thus making its recovery look more K-shaped than V-shaped. An improvement in GDP should bode well for REIT cash flow growth over the next 12 months. According to UBS, consensus forecasts a call for a strong recovery in global REIT earnings in 2021, rising 11%, after a 5.8% decline in 2020.

We believe there is strong empirical evidence linking earnings growth and share price performance: i.e., as top-line growth recovers, so will earnings, and so will REIT share prices in 2021. Given the significantly larger decline in REIT share prices in 2020 relative to the decline in earnings of 5.8%, we believe this reversal could foreshadow a disproportionate increase in REIT share prices in 2021.