Nareit T-Tracker Shows Steady Improvement in REIT Operating Performance

Nareit’s Total REIT Industry Tracker Series (Nareit T-Tracker) results for the third quarter of 2015 point to a steady improvement in REIT operating performance.

U.S. listed Equity REITs  produced total funds from operation (FFO) of $13.4 billion in the third quarter, 2.7 percent higher compared with the second quarter and a 13.1 percent increase from the third quarter of 2014.

The Nareit T-Tracker is a quarterly, composite performance measure of the entire U.S. stock exchange-listed REIT industry. Total FFO and net operating income (NOI) for all listed Equity REITs offer a gauge of the industry’s operating performance.

“REIT operating performance increased in each of the first three quarters this year over the same quarter in 2014,” said Steven Wechsler, Nareit’s president and CEO. “In contrast to the volatility in the financial markets, the steady improvement in real estate fundamentals continues to support the REIT sector.”

Third quarter FFO per share was 2.4 percent higher than the second quarter of 2015 and 3.4 percent higher than the same period last year.

Total NOI was $20.2 billion in the third quarter, a gain of 1.9 percent from the second quarter of 2015 and a 13.2 percent increase from the third quarter of 2014.

“Despite some choppiness in GDP and employment, steadily rising occupancy and rents have helped REITs deliver consistent double-digit year-over-year growth in FFO and NOI,” said Calvin Schnure, Nareit’s senior vice president of research and economic analysis.

Same-store NOI rose 4 percent in the third quarter compared with the same period a year ago, which was in line with growth in prior quarters. Total dividends paid by all listed REITs, including both Equity REITs and Mortgage REITs, were $10.9 billion in the third quarter, a 2.3 percent increase from the second quarter and a 10.1 percent increase from the same period last year. Total dividends paid include $9.3 billion for listed Equity REITs and $1.6 billion for listed Mortgage REITs.

Dividends per share in the third quarter rose 2.1 percent from the second quarter of 2015 and were 1.5 percent above the same period a year earlier.