Market Commentary

REITs have low exposure to floating rate debt, with over 87% of the debt held by the industry at fixed rates.

REITs underperformed broader markets in 2022, as the FTSE Nareit All Equity REITs Index posted a total return of -24.9% and the FTSE Nareit Equity REITs Index returned -24.4%.

REITs offer sector diversification by giving investors better access to property sectors that house the modern economy, such as cell towers, data centers, self-storage, health care, industrial, and logistics.

REITs have a long runway to manage leverage in the higher interest rate environment because they have used fixed rate debt to lock in low interest rates for long terms.

Hiring was strong in the hospitality, warehouse, and retail sectors in October, and the data marked 2.5 years with hires greater than separations.

REITs posted positive results for the second consecutive month in November and outperformed stocks for the first time since April, as the FTSE Nareit All Equity REITs Index rose 6.0% and the FTSE Nareit Equity REITs Index gained 5.8%.

With mixed economic growth results, waning job gains, increasing interest rates, and rising recession risk, the U.S. economy is facing numerous headwinds.

An estimated 150 million Americans live in households that are invested in REIT stocks in 2022 directly or indirectly through mutual funds, ETFs, or target date funds, new research by Nareit shows.

REITs and stocks posted their first positive monthly performance since July.

After experiencing two consecutive quarters of negative growth in the first half of 2022, U.S. real GDP grew by 2.6% in the third quarter this year.

The U.S. is shifting toward a greater interest in renewable energy, and the rooftop areas of buildings across the country offer a potential source of energy generation with the installation of solar panels.

With inflation remaining at 40-year highs, interest rates escalating, and economic growth contracting, the U.S. economy is in a precarious state.