Bloomberg company news continually tells me that real estate shares are hitting a 52-week high. You’d have thought that was good news, and in a way, it is. But it rather masks the fact that the FTSE 100 and the FTSE All Share Index have also not just hit their 52-week high, but also their all-time high, and by some margin.

As such, UK REITs now lag the All Share Index by nearly 12% YTD. Not a single REIT within our 30-strong coverage list has outperformed the broader equity market. If I was looking for a single characteristic that explained the divergence in performance between the various REITs, I couldn’t give you one. The best – or rather, “least bad” – performers have little asset correlation between them.

Okay, so LondonMetric and Segro own sheds, but British Land has done better, as has Hammerson, as has Shaftesbury Capital. Sheds, shopping centres, London offices and London shops characterised the portfolios of those four, but at the same time others owning similar assets have lagged even further behind. The amount of energy and brainpower, experience, research and knowledge that both the buy and sell side put into stock selection and preferences and performance resembles a six-year-old chucking darts at the board; there aren’t many Luke Littler’s around, that’s for sure.

What’s driving this random performance remains the macro. We get data points mainly from the US showing adhesive inflation that means rates are higher for longer, only to be followed by a benign print that points to early rate cuts. What that prompts is the more highly leveraged REITs, mainly on the European continent, to rise and fall sharply on an intra-day basis with little if any reference to the underlying assets that the companies own.

So, while all this “nonsense” carries on, all I keep re-iterating is that for the right assets in the various sub-sectors – be it offices, sheds, shopping centres, retail parks, PBSA, self-storage, BTR, doctor’s surgeries, nursing homes, even life science space for goodness’ sake! – for the right space, rental values are a one-way, upward-only bet at the moment.

Now rental values in local markets have never ever driven REIT share prices which are at the whim of competing equity and above all bond assets and pricing, but at some point rates will fall and, with it, bond yields. Plus, if rental prospects remain solid – and let’s face it a development boom is most unlikely – then 5% or so rental growth and 100bps+ of falling yields remains an attractive and potent cocktail, especially off big discounts and when the equity market is at an all-time high. As a rather successful investor once said: “be greedy when others are fearful” and vice versa.

I remember there was a thing called the dot-com bubble when real estate was about to become completely redundant – that was just before the asset class went on a five-year tear.