2025 Corporate Real Estate Outlook: Sector Well Positioned to Benefit from Favorable Dynamics

In this commentary, we review 2024 real estate issuance and performance, followed by our outlook for 2025 and sector-specific views:

-- Real estate investment trusts (REITs) and real estate operating companies (REOCs) rated by Morningstar DBRS are likely to continue robust bond issuance in 2025, as interest rates continue to trend downward and transaction activity accelerates
-- We anticipate management teams will continue to manage risk constructively during a period of relative stability, thus supporting our modestly positive credit ratings outlook.
-- 2024 was a relatively dynamic year of rating actions while issuers were constructively managing their credit risk profiles.

"We believe 2025 is setting up to be another dynamic year of favorable shifts in credit risk, rating actions, and transaction activity for our rated real estate issuers," said Jason Tam, Assistant Vice President, North American Corporate Real Estate, at Morningstar DBRS. "The sector appears well positioned to benefit from positive tailwinds. These constructive conditions support our favorable view on issuance volume, credit risk, and our positive tilt on rating actions in 2025."