- Morningstar Analysis Shows Importance of Meaningful REIT Allocations
Morningstar Associates’ analysis finds optimal portfolio allocations to REITs up to 13% in well-diversified portfolios.
- REITs Outperform Private Equity Real Estate Funds
New research by a team of academic researchers and practitioners compares private equity real estate (PERE) fund performance with REITs over matched investment horizons. The study, Private Equity Real Estate Fund Performance: A Comparison to Listed REITs and Open-end Core Funds, uses a unique data set comprising 375 U.S. and 255 international PERE closed end funds with vintages from 2000 to 2014. The study analyzes whether investors in each of the PERE funds would have enjoyed higher return by investing in REITs. REITs outperformed PERE funds by a wide margin.
- Economic Contribution of REITs in the United States
Nareit commissioned EY to estimate the current economic contribution of all U.S. REITs (including public listed, public non-listed, and private REITs) in the United States. The total economic contribution of U.S. REITs in 2019, the most recent year of complete information, was an estimated 2.6 million full-time equivalent (FTE) jobs and $173.3 billion of labor income. . The total economic contribution, or “footprint,” of REITs consists of the direct operations of REITs and related businesses in the United States, as well as the impacts from dividend and interest payments by REITs and REIT property improvement and construction investments.
- CEM Benchmarking Study Highlights REIT Performance Versus Private Real Estate
CEM Benchmarking’s 2021 study, sponsored by Nareit, provides a comprehensive look at realized investment performance across asset classes over a 22-year period (1998-2019) using a unique dataset covering over 200 public and private sector pensions with nearly $3.6 trillion in combined assets under management. One of the unique benefits of the CEM dataset is that it provides the actual realized performance of the assets chosen by plan managers and trustees.
- Economic Contribution of REITs in the United States
Nareit commissioned EY to estimate the current economic contribution of all U.S. REITs (including public listed, public non-listed, and private REITs) in the United States. The total economic contribution of U.S. REITs in 2018, the most recent year of complete information, was an estimated 2.4 million full-time equivalent (FTE) jobs and $148.2 billion of labor income. The total economic contribution, or "footprint," of REITs consists of the direct operations of REITs and related businesses in the United States, as well as the impacts from dividend and interest payments by REITs and REIT property improvement and construction investments.
- Wilshire Study Shows REITs Boost Returns in Target Date Funds
Wilshire Funds Management studied the role of REITs in Target Date Funds and found they are critical to improving investment returns and reducing risk in these funds. It is expected that the majority of new 401(k) and IRA assets will be invested in Target Date Funds over the coming decades and the retirement security of millions of Americans will depend upon their investment performance.
- Wilshire Income-Oriented Retirement Planning Study
New research from Wilshire Funds Management, sponsored by NAREIT and based on 40 years of investment return data, showed that adding a range of high income-generating assets (including REITs) to a traditional retirement-stage portfolio could boost income returns by nearly 40 percent, while providing comparable total returns and no increase in risk. Wilshire’s research is based on a variation of the Mean-Variance Optimization (MVO) method for portfolio modelling called Income Oriented Mean Variance Optimization (IOMVO). Wilshire found that a traditional MVO-modelled portfolio that delivered a 2.37 percent annual income return and a 5.37 percent annual total return with an 8 percent level of portfolio risk could be enhanced with IOMVO modelling to deliver a greater annual income return of 3.25 percent and a comparable 5.27 percent annual total return with the same 8 percent level of risk.
- MSA Geographic Allocations, Property Selection, and Performance Attribution in Public and Private Real Estate Market Returns
by David C. Ling (University of Florida), Andy Naranjo (University of Florida), and Benjamin Scheick (Villanova University)
Noting previous research indicating that total returns from stock exchange-traded equity REITs have outpaced those produced by institutional and private-equity real estate investors after controlling for differences in leverage and in property-type mix, the authors ask whether the "REIT premium" might arise from differences in the allocation of capital across metropolitan areas. Comparing data from REITs and from the National Council of Real Estate Investment Fiduciaries (NCREIF), they indeed find significant differences in geographic allocation. They also find, however, that differences in metro-area selection account for only a small share of outperformance by REITs, with selection of individual properties within each metro area playing a much more important role.
- Download the levered and unlevered Equity REIT return data used in this report.
- Academic Research: REITs Outperformed Private Real Estate Over 1994-2012
This research, sponsored by NAREIT and conducted by two University of Florida economists, finds that exchange-traded equity REITs provided returns 0.49% greater per year, on average, compared to equivalent non-REIT real estate investments. The research also finds that REIT returns predicted private real estate returns by reacting more quickly to market conditions, thereby serving as “a fundamental information transmission channel.”