Market Commentary

In 2021 REIT capital market activity has been highlighted by the announcement of eleven REIT mergers.

The return-to-office of employees who have worked from home during the pandemic is rebounding, after a pause during the Delta variant surge of COVID-19.

Last week’s increase raised the year-to-date returns above 30%, to 30.2%.

Last week’s gain, which came after five consecutive weeks of downward moves, brought year-to-date returns to 27.1%.

Many of the 19.6 million employees who continue to telecommute because of the pandemic are likely to return to the office in the first half of next year.

REIT share prices were little changed last week, with the FTSE Nareit All Equity REITs Index total return edging down 0.3%.

The large specialist ownership base for REITs can help investors in direct and indirect ways.

Broader markets also fell, with a decline of 2.2% on both the Russell 1000 and the S&P 500.

The REIT underweight for generalist funds benchmarked against the S&P 500 declined from 114 basis points in 2016Q4 to just 62 basis points as of 2021Q2.

Multiple studies conducted by different research firms have come to similar conclusions, finding that the optimal portfolio allocation to REITs may be between 5% and 15%.

REITs edged lower last week, with a total return of -1.0% on the FTSE Nareit All Equity REITs Index.

REITs edged narrowly lower for the week ended Sept. 17th, but outpaced other equities.