Equity REITs Post 7.4 Percent Gain in FFO in 2016

Equity REITs reported a 7.4 percent gain in funds from operations (FFO) in the fourth quarter, according to recently-released T-Tracker® data (Chart 1). Solid fundamentals in REIT-owned properties drove earnings higher, as occupancy rates rose to a record 94.5 percent, and same-store NOI (SS NOI) increased 3.6 percent over one year ago (Charts 2, 3).

These T-Tracker results for U.S. listed Equity REITs also constitute an “Earnings Scorecard” for the new Global Industry Classification Standard (GICS®) headline Sector for Real Estate that was introduced last year. FFO per share of Equity REITs that are members of the S&P 500 increased 13.8 percent over one year ago, compared to 9.9 percent growth of earnings per share (EPS) for the market cap-weighted S&P 500 (Table 1). Only one Sector — Consumer Discretionary — delivered stronger earnings growth than the Real Estate Sector’s Equity REITs (Chart 4).

This edition of NAREIT’s T-Tracker introduces several additional measures of the U.S. listed REIT industry, including the property development pipeline, weighted average leverage, debt maturities, interest paid and interest coverage ratios. For charts and downloadable data, visit our T-Tracker page.

The Market Commentary blog on reit.com presents analysis of the macro- and micro-economic fundamentals impacting the REIT and commercial real estate industry. Economists Brad Case, Calvin Schnure and the rest of the Nareit economics team offer 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.