The FTSE Nareit All Equity REITs Index rebounded from a weak January, rising 1.9% in February. REITs underperformed broader markets as the Russell 1000 and Dow Jones U.S. Total Stock Market both rose 5.4%. While investors continue to expect monetary policy to become more accommodative this year, expectations for when the Federal Reserve will begin to ease interest rates have been pushed later in the year than previously expected.
As of Feb. 29, the dividend yield on the FTSE Nareit All Equity REITs index was 4.04% and the FTSE Nareit Mortgage REITs Index yielded 12.40%, compared to 1.38% for the S&P 500. The 10-Year Treasury yielded 4.24% at the end of February.
As reflected in the table above, since Oct. 19, 2023, the All Equity REITs index has risen 18.4%. Broader markets were positive over this period as well, as the Dow Jones U.S. Total Stock Market rose 20.3% and the Russell 1000 returned 20.2%. Notable returns by sector over this period include specialty at 30.8%, lodging/resorts at 29.8%, data centers at 27.8%, office at 27.2%, and industrial at 25.2%.
As shown in the table above, REITs rose 1.9% in February. Specialty led with a return of 10.5%, followed by data centers at 6.5% and lodging/resorts at 6.5%. At the subsector level, regional malls returned 6.6%. Diversified lagged with a return of -7.8%, followed by self-storage at -0.8%. On a year-to-date basis, the data centers sector leads with a total return of 10.3%, while diversified lags at -13.2%.
The FTSE Nareit Mortgage REITs Index declined 0.8% in February. Home financing mREITs declined 0.1% for the month, while commercial financing mREITs were down 1.7%.