In the second quarter, the Chilton REIT Composite performed in line with the RMZ by producing a total return of -1.0% gross of fees and -1.2% net of fees, which compares to the RMZ’s total return of -1.1%.  Year to date, the Chilton REIT Composite has outperformed the RMZ by producing a total return of +2.7% gross of fees and +2.4% net of fees, which compares to the RMZ’s total return of -0.1%.  Additionally, the Chilton REIT Composite outperformed the Vanguard Real Estate Index (VNQ), our secondary benchmark, that produced a YTD total return of +2.0%.

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Second Quarter 2025 Attribution

Positive contributors to relative performance for the second quarter of 2025 included overweight allocations to the cell tower, and stock selection within the residential and self storage sectors. Conversely, an underweight allocation to the specialty sector, stock selection within the industrial sector, and an underweight allocation to the lodging sector detracted from relative performance.

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Year-to-Date 2025 Attribution

Positive contributors to relative performance for 2025 included an overweight allocation to the cell tower sector, an underweight allocation to the lodging sector, and stock selection within the office sector.  Conversely, an underweight allocation to the triple net sector, stock selection within the industrial sector, and an overweight allocation to the data center sector detracted from relative performance.

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2025 Contributors Summary

• An overweight allocation to the cell tower sector contributed to relative performance.  Given the long lease terms typical in cell towers, the group has been negatively impacted by rising rates in recent years.  However, given the specter of falling rates, coupled with an attractive valuation, we have witnessed material outperformance in cell towers thus far for 2025.

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• An underweight allocation to the lodging sector also contributed to relative performance.  In particular, fears around waning consumer health have weighed on the lodging REITs in 2025 and contributed to Composite relative performance.

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• Stock selection within the office sector also contributed to relative performance.  Most notably, our strategy held overweight positions in Highwoods Properties (NYSE: HIW) and BXP Properties (NYSE: BXP), both of which outperformed the group average.

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2025 Detractors Summary

• An underweight allocation to the triple net sector detracted from the Composite’s relative performance.  Given the long lease terms typical in triple net, the group has benefited from the specter of falling rates this year.  

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• Stock selection within the industrial sector also detracted from relative performance.  In particular, we have an overweight to cold storage, which has underperformed due to continued pressure on food volumes and weighed on Composite relative performance.

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• An overweight allocation in the data center sector also detracted from relative performance.  Notably, DeepSeek-R1 released a paper in January touting artificial intelligence leaps at a fraction of the cost.  This has weighed on data center REITs given the potential for reduced space needs for AI advancements.  Looking past this near-term headwind, we think the reduction in AI costs drive more investment over the long term.

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Market Commentary

REITs Can Hold the Line in a Tariff War | May 2025

Public REITs Are Positioned for Trophy Office Upside | June 2025

Equity REITs: Takeaways from REITWeek 2025 | July 2025

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Additional Disclosures

The information contained herein should be considered to be current only as of the date indicated, and we do not undertake any obligation to update the information contained herein in light of later circumstances or events. This publication may contain forward looking statements and projections that are based on the current beliefs and assumptions of Chilton Capital Management and on information currently available that we believe to be reasonable, however, such statements necessarily involve risks, uncertainties and assumptions, and prospective investors may not put undue reliance on any of these statements. This communication is provided for informational purposes only and does not constitute an offer or a solicitation to buy, hold, or sell an interest in any Chilton Capital Management investment or any other security.

Past performance is not indicative of future results.  Investment returns and principal value will fluctuate so that an investor account, when redeemed, may be worth more or less than their original cost.  Current performance may be lower or higher than the performance data quoted. MSCI US REIT Index and Vanguard Real Estate ETF performance is presented as a benchmark for reference only and does not imply any portfolio will achieve similar returns, volatility or any characteristics similar to any actual portfolio.  The composition of a benchmark index may not reflect the manner in which any is constructed in relation to expected or achieved returns, investment holdings, sectors, correlations, concentrations or tracking error targets, all of which are subject to change over time.