Concerns about a weaker than expected economic recovery didn’t hurt the U.S. REIT market in April, according to Brad Case, NAREIT’s senior vice president for research and industry information.
In a video interview with REIT.com on the monthly market performance of REITs, Case consumer spending was one factor that helped lift REITs over the broader stock market for the month. While the broader market indexes dipped slightly, the FTSE NAREIT All REIT Total Return Index increased nearly 3 percent.
The overall economic data underwhelmed observers. While the numbers may have disappointed analysts, the tepid recovery didn’t impact publicly traded REITs, Case explained.
“It was a very strong month in the real estate market for investors investing through REITs,” Case said. “That’s actually something that we’re getting used to. If you look on a year-to-date basis, REITs have quite strongly outperformed the stock market in 2012.”
Case noted that REITs have generally outperformed the broader market over the course of longer time horizons, too.
Case singled out the fledgling infrastructure sector for its strong performance during April. The sector gained more than 9 percent for the month.
“There is a way for investors to make investments in infrastructure through publicly traded REITs,” Case said.
Regional malls also stood out, according to Case.
“Although there was concern about the overall economic recovery, there wasn’t really concern about consumer spending,” he said. “So regional mall REITs returned very strong during April. I think really what we’re seeing is that there is so much pent-up demand among consumers for things that they would like to buy that retail REITs are seeing the benefit of that.”
Case also highlighted the returns of the mortgage REIT sector. Overall, mortgage REITs climbed 3.5 percent for the month.
“Actually mortgage REITs as a whole outperformed equity REITs, so companies that owned mortgages and are invested in mortgages outperformed companies that are in buildings,” Case said.
Home mortgage REITs had a particularly strong month, according to Case. Additionally, they offer a dividend yield of 14 percent.
“So really a very strong combination of total return during the month of April and a continuing high dividend yield,” he commented.