Nicole Funari

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.

Among survey respondents more than 62% of REITs by equity market capitalization indicated that they experienced an increase in ESG reporting requests from investors between 2019 and 2020.

The growing use of target-date funds (TDFs) remains the dominant investment-related trend in the defined contribution and individual retirement account markets, and REITs continued to be a critical component of TDFs in 2020.

Real estate rents and values tend to increase when prices do, due in part to the fact that many leases are tied to inflation. This supports REIT dividend growth and provides a reliable stream of income even during inflationary periods.

From 2016 to 2019, the jobs equivalent contribution from REITs has risen by 600 thousand.

REIT balance sheets were strong heading into the pandemic with easy access to cash and lines of credit, and operating performance proved to be resilient.