Market Commentary

The overall REIT sector was slightly down, with the All Equity REITs total return index declining 0.6%.

The FTSE Nareit All Equity REITs index posted total returns of negative 4.5%. Broader markets were down as well, with the Russell 1000 reversing nearly all the gains of the prior week.

The good news about the outlook for the economy and commercial real estate as of early June is that we are likely at a turning point for labor markets, consumer spending, and business activity.

REITs extended their weekly winning streak to three weeks of gains, and are up five of the past six weeks.

The percentage of mortgages held in commercial mortgage-backed securities (CMBS) that were 30+ days delinquent jumped from 2.29% in April to 7.15% in May.

The gradual reopening of the economy in the weeks and months ahead will restart the cash flows for many businesses small and large.

The FTSE Nareit All Equity REITs index posted a total return of 6.9%, the strongest weekly return in six weeks and outpacing the 3.5% total return on the Russell 1000.

The REIT sector overall entered this crisis period from a stronger position than in previous market downturns in terms of operational performance, balance sheet strength and sources of liquidity available for the potentially lean months ahead.

REIT earnings were impacted by the COVID-19 crisis in the first quarter, with funds from operation (FFO) declining 9.0% from the prior quarter, to $15.0 billion, according to the Nareit T-Tracker®.

The FTSE Nareit All Equity REITs index closed down 8.2% for the week ended May 15^th, the first weekly decline for the month of May.

The most recent rent survey results show that on average for REITs, the share of typical rent collected in May was largely unchanged from April.