REITs Down in August

9/1/2011 | By Allen Kenney
General macroeconomic turbulence roiled the U.S. markets in August, spilling over into the REIT industry’s performance in the process.

The FTSE NAREIT All REIT Total Returns Index fell 5.06 percent for the month. REITs did manage to slightly outperform the broader markets in August, however, as the S&P 500 was down 5.43 percent and the Russell 2000 Total Return Index was down 8.70 percent.

The FTSE NAREIT All REIT Total Returns Index remains in the black for 2011, up nearly 5 percent through the first eight months of the year. In contrast, the S&P 500 has fallen approximately 2 percent during that same time period.

Brad Case, NAREIT’s senior vice president for research and industry information, said investors’ concerns about the political situations in the United States and Europe in part fueled the downturn for REITs in August. Yet, overall, the numbers did hold positive news for the REIT market, according to Case.

“August was a difficult month for investors, with concerns about political leadership in Washington and Europe resurrecting fears of economic weakness,” Case said. “The fact that REITs again outperformed the rest of the stock market reinforces both investors’ confidence in REIT earnings growth and the importance of REITs as a portfolio diversifier.”

The self storage sector paced U.S. equity REITs, climbing 2.87 percent in August. The only other sector to finish the month with gains was residential, which held steady with a 0.4 percent increase. Mortgage REITs gained 2.15 percent during the month.

REITs also witnessed negative returns in August on the global front as well. The FTSE EPRA/NAREIT Global Real Estate Total Returns Index fell 6.18 percent for the month. The European component of the global index saw the largest monthly decline, dropping 8.24 percent.

For the year through the end of August, the FTSE EPRA/NAREIT Global Real Estate Total Returns Index has dropped 1.13 percent. The Americas component has climbed 3.87 percent during that same time period, while the European component is up 3.79 percent.

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