All REIT Sectors Declined Last Week

All property sectors of the REIT universe declined last week as a surge in new cases of COVID-19 in many states raised concerns that the economic reopening may be delayed. The All Equity REITs total return index was down 4.0% in the week ended June 26, the third consecutive weekly loss. These declines, however, follow a string of weekly increases and erase a portion of the gains in prior weeks, leaving the sector little changed for the month. Over a bit longer time horizon, REITs are still in positive territory for the second quarter with total returns of nearly 10%. The declines year-to-date remain significant, at 15.9%.

Several of the sectors that had been most vulnerable to negative news on the virus in prior weeks did not respond strongly last week. For example, retail REITs had a total return of -4.0%, matching the decline in the overall index; health care REITs had a total return of -2.4%, and home financing mREITs had a total return of -2.5%. Lodging/resorts, however, had the second-largest decline last week of -8.4%, following the -10.4% total return of specialty REITs.

An improvement in rent collections in some of these sectors may have buffered the headline news on the virus. Nareit last week released results of a survey that showed rent collections improving in June compared to May and April. Shopping centers collected more than 60% of typical rents in June, compared to less than 50% in April and May. Several other sectors saw an increase, with rent collections of free standing retail rising from 70.6% to 79.4% and health care REITs increasing from 89.8% to 95.0%. Rent receipts continued to be high at industrial, apartment, and office REITs.

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The Market Commentary blog on presents analysis of the macro- and micro-economic fundamentals impacting the REIT and commercial real estate industry. The Nareit economics team offers their commentary on the state of the market, the outlook for commercial real estate and breaking macroeconomic news. The opinions set forth here are solely those of its author(s), and do not necessarily reflect the views of the Nareit or its membership. For more, see our Terms of Use.