Perspective

The first quarter of 2026 marked the clearest transition yet away from the defensive posture that defined much of the past two years. Earnings were broadly better than feared, guidance cuts remained limited, and management commentary shifted back toward leasing, pricing, and operations rather than refinancing risk. Investors rewarded companies that demonstrated tangible operating momentum and credible growth visibility.

More importantly, the quarter reinforced a dynamic that has been building for several periods: fundamentals, not macro narratives, are once again becoming the primary sorting mechanism across the REIT market. Sectors with secular demand drivers and pricing power widened their lead, while those reliant on lower rates, expense control, or cyclical recovery continued to lag. The shape of the market did not change in 1Q26, but the contrast sharpened.

 
This was not a euphoric quarter. It was a normalizing one, and normalization was exactly what investors wanted. Companies that paired real demand with disciplined capital allocation earned the benefit of the doubt. Those leaning primarily on cost cutting, financial engineering, or hopes for lower rates generally did not.

Gold

Data Centers reaffirmed their position as the REIT market’s leading structural growth category. Demand tied to artificial intelligence (AI) infrastructure, cloud expansion, and high-density computing continues to exceed available supply, translating into leasing momentum, backlog growth, and longer-term customer commitments.

The constraint is not demand, but power availability and development execution. That bottleneck continues to reinforce scale advantages for the largest operators, who are increasingly able to secure power, pre-lease capacity, and lock in multi-year pricing. The industry still cannot build capacity fast enough to keep pace with demand, leaving visibility unusually strong relative to most real estate sectors.

Health care delivered one of the most balanced quarters across the REIT universe. Senior housing is finally converting demographic tailwinds into measurable operating results, with rising occupancy, firmer pricing, and visible operating leverage. Labor pressures continued to moderate, supporting margin expansion.

Medical office remained a stabilizing counterweight with durable leasing and defensive cash flows, while skilled nursing fundamentals stayed steady as reimbursement concerns eased. Importantly, guidance increases across the sector generally appeared earned rather than engineered, a meaningful shift from prior years.

Silver

Retail delivered another quarter of quiet, durable execution. Shopping centers benefited from limited new supply, healthy tenant demand, and improving small-shop occupancy. Leasing spreads held up well, while tenant mix remained skewed toward service and necessity categories that have proven relatively resilient even as consumer spending softened modestly.

Malls again exceeded expectations. Cash generation remained strong, reinvestment disciplined, and leasing momentum healthy. We believe the gap between market perception and actual operating performance remains wider than many investors assume.

Industrial posted an incrementally positive quarter. Occupancy remained high, mark-to-market rent opportunities were still meaningful, and management tone reflected realism rather than nostalgia for the extraordinary conditions of 2021 and 2022. The era of effortless double-digit rent growth has passed, but underlying fundamentals remain healthier than in most property sectors.

Development pipelines became more selective, and supply discipline improved across several markets. Demand is no longer running at post-pandemic extremes, but scarcity in infill locations and ongoing supply chain modernization continue to support the long-term outlook.

Gaming delivered another steady quarter supported by long-duration leases, contractual rent growth, and stable tenant performance. Cell Towers improved as leasing stabilized and churn concerns moderated, though near-term catalysts remain more muted relative to other infrastructure-oriented sectors.

Bronze/No Medal This Quarter

Office posted its best earnings season in several years, albeit from a very low base. Leasing activity improved modestly, concessions stabilized, and the reopening of debt markets eased liquidity concerns. The narrative shifted incrementally from deterioration toward stabilization.

That said, recovery remains uneven and highly asset specific. Trophy assets continue to separate themselves from commodity office product, while refinancing and balance sheet repair remain multi-year challenges for much of the sector. The worst-case scenarios that dominated investor sentiment in 2023 and early 2024 appear increasingly less likely, but few investors are prepared to call for a broad recovery.

Residential REITs remained stuck in neutral. Apartments continued to face supply pressure across several Sunbelt markets, weighing on near-term pricing and growth expectations. Single-family rentals remained steadier but lacked visible acceleration, while manufactured housing continued to benefit from affordability and limited turnover.

Self Storage showed early signs of stabilization, though lingering supply pockets limited conviction in a broader recovery. Lab Space continued to work through slower leasing activity and cautious tenant demand, while Cold Storage remmained difficult to underwrite confidently given inconsistent operating trends.

Final Word

The quarter did not change the shape of the REIT market. It clarified it. Investors rewarded sectors where favorable demand is already translating into execution, not just narrative. Data Centers and Health Care extended their leadership, Retail and Industrial remained fundamentally durable, and even Office showed early signs of stabilization.

The broader message from the quarter was simple: fundamentals once again became the primary sorting mechanism. In a market still searching for broad-based recovery, investors increasingly paid up for visibility and discounted ambiguity.

For public real estate investors, the opportunity is no longer simply buying rate-sensitive assets at discounts. It is identifying which REITs have real earnings power in a market that is finally separating growth from hope.

Author: Peter Zabierek, CFA
Senior Portfolio Manager
Easterly Ranger

---

IMPORTANT INFORMATION

© 2026. Easterly Asset Management. All rights reserved.

As of March 31, 2026, Easterly Asset Management and its Strategic Partners had nearly $3.1B in managed assets which includes over $2.7B in assets under management and administration of Easterly Investment Partners LLC, an SEC registered investment adviser. Easterly Snow and Easterly Ranger are investment teams of Easterly Investment Partners LLC. EAB Investment Group LLC (d/b/a Easterly EAB) and Orange Investment Advisors LLC (d/b/a Easterly Orange) are separate SEC-registered investment advisers that are strategic partners of Easterly. Each investment adviser’s Form ADV is available at www.sec.gov. Registration does not imply and should not be interpreted to imply any particular level of skill or expertise.

No funds or investment services described herein are offered or will be sold in any jurisdiction in which such an offer or sale would be unlawful under the laws of such jurisdiction. No such fund or service is offered or will be sold in any jurisdiction in which registration, licensing, qualification, filing or notification would be required unless such registration, license, qualification, filing, or notification has been effected.

The material contains information regarding the investment approach described herein and is not a complete description of the investment objectives, risks, policies, guidelines or portfolio management and research that supports this investment approach. Any decision to engage the Firm should be based upon a review of the terms of the prospectus, offering documents or investment management agreement, as applicable, and the specific investment objectives, policies and guidelines that apply under the terms of such agreement. There is no guarantee investment objectives will be met. The investment process may change over time. The characteristics set forth are intended as a general illustration of some of the criteria the strategy team considers in selecting securities for client portfolios. Client portfolios are managed according to mutually agreed upon investment guidelines. No investment strategy or risk management techniques can guarantee returns or eliminate risk in any market environment. All information in this communication has been obtained from sources believed to be reliable but cannot be guaranteed. Investment products are not FDIC insured and may lose value.

Investments are subject to market risk, including the loss of principal. Nothing in this material constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate. The information contained herein does not consider any investor’s investment objectives, particular needs, or financial situation and the investment strategies described may not be suitable for all investors. Individual investment decisions should be discussed with a personal financial advisor.

Any opinions, projections and estimates constitute the judgment of the portfolio managers as of the date of this material, may not align with the Firm’s opinion or trading strategies, and may differ from other research analysts’ opinions and investment outlook. The information herein is subject to change without notice and may be superseded by subsequent market events or for other reasons. Easterly assumes no obligation to update the information herein.

References to securities, transactions or holdings should not be considered a recommendation to purchase or sell a particular security and there is no assurance that, as of the date of publication, the securities remain in the portfolio. Additionally, it is noted that the securities or transactions referenced do not represent all of the securities purchased, sold or recommended during the period referenced and there is no guarantee as to the future profitability of the securities identified and discussed herein. As a reminder, investment return and principal value will fluctuate.

The indices cited are, generally, widely accepted benchmarks for investment performance within their relevant regions, sectors or asset classes, and represent non managed investment portfolio. It is not possible to invest directly in an index.

This communication may contain forward-looking statements, which reflect the views of Easterly and/or its affiliates. These forward-looking statements can be identified by reference to words such as “believe”, “expect”, “potential”, “continue”, “may”, “will”, “should”, “seek”, “approximately”, “predict”, “intend”, “plan”, “estimate”, “anticipate” or other comparable words. These forward-looking statements or other predications or assumptions are subject to various risks, uncertainties, and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Should any assumptions underlying the forward-looking statements contained herein prove to be incorrect, the actual outcome or results may differ materially from outcomes or results projected in these statements. Easterly does not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law or regulation.

Past performance is not indicative of future results.

05202026_5506746