Nicole Funari

Despite continuing high inflation, REIT returns continue to outpace returns for the S&P 500 on an annualized basis and REIT operating performance growth has exceeded price growth in 2021.

REITs average higher returns over multi-year time horizons compared to private real estate with a broader allocation across innovative property sectors, according to Nareit analysis of past performance.

Historically, REITs have performed well during periods of rising long-term interest rates with average four-quarter return in periods with rising rates of 16.55% compared to 10.68% in non-rising rate periods from the first quarter of 1992 to the fourth quarter of 2021.

REITs have outperformed private real estate property and fund indexes through the fourth quarter of 2021 and have an annual increase of 41.3% in 2021 compared to 22.2% for private real estate.

There are currently 41 countries and regions, accounting for 85% of global GDP with a combined population of nearly 5 billion people, that have enacted REIT legislation.

At the end of 2020, U.S. public REITs owned an estimated 502,937 properties and 15.1 million acres of timberland across the U.S.

In 2021, REITs outperformed the S&P 500 by 12.6 percentage points with an annual return of 41.3%.

Early indications from the past two quarters suggest REITs are likely to perform well if we enter into a sustained inflationary environment.

EY’s latest REIT Economic Contributions report estimates REITs supported 2.93 million full time equivalent jobs in the U.S in 2020, producing $197.0 billion in labor income.

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

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.

Analysis shows REIT long-term returns outpaced home ownership returns, even accounting for the imputed value of rent.