REIT returns were higher in March and outperformed the broader market during both the month and the first quarter of the year. Solid gains were posted across most sectors.
The total returns of the FTSE Nareit All REITs Index rose 4.2 percent in March, while the S&P 500 advanced 1.9 percent. The total returns of the FTSE Nareit Mortgage REIT Index also rose 1.9 percent in March, while the yield on the 10-year Treasury note fell 0.3 percent.
For the first quarter, the FTSE All REITs Index rose 16.7 percent while the S&P 500 rose 13.7 percent.
Nick Yulico, head of U.S. REIT research at Scotiabank, noted that tighter credit spreads have helped the sector’s performance year-to-date. Alexander Goldfarb, senior REIT analyst at Sandler O’Neill + Partners, L.P., added that the drop in the 10-year Treasury yield played a big role in REITs rebounding in the month.
Looking ahead, Yulico said the question becomes whether some REITs may have been too cautious in their estimates for 2019. Indeed, Chilton Capital Management noted that apartment REITs have already provided an update on year-to-date same store revenue growth, showing 2019 guidance may have been too conservative.
Infrastructure REITs saw the strongest gains, with returns of 10.6 percent in March and 21.4 percent for the first quarter. Returns for data center REITs stood at 6.7 percent in March and 20.2 percent for the first quarter.
Industrial REIT returns advanced 21.3 percent for the first quarter and 3.9 percent in March. Pricing and rental growth remains strongest for last mile properties in high-income urban areas, but the outlook appears increasingly bright for temperature-controlled warehouses, as well, according to Chilton.
Retail REIT returns added 2.6 percent in March and advanced 14.4 percent for the quarter. Office REIT returns advanced 20.3 percent in the first quarter and 2.9 percent in March.