The FTSE Nareit All Equity REITs Index fell 5.7% in September, lagging broader equity markets on both a monthly and year-to-date basis. Broader equity markets also declined over the month, though more modestly, with the Russell 1000 falling 0.6% and the Dow Jones U.S. Total Stock Market declining 0.7%.
On a year-to-date basis, the All Equity REITs Index has returned 7.9%, trailing the Dow Jones U.S. Total Stock Market’s 12.6% total return and gains of 12.3% from the Russell 1000. In a broadly anticipated move to address inflation that has remained above target, the Federal Reserve raised the Federal Funds rate 25 basis points. While the rate hike was expected, steadily rising bond yields have presented headwinds that REITs have felt more acutely than the broader stock market.
The 10-year Treasury yield continued to climb in September, closing at 5.27%, a level not seen in nearly a quarter century, and up from 4.18% at the end of 2025. The dividend yield on the FTSE Nareit All Equity REITs Index ended the month at 3.93%, and the FTSE Nareit Mortgage REITs Index yielded 15.68%, compared to 1.03% for the S&P 500.
Property Sector Performance
As reflected in the exhibit above, lodging/resorts continues to lead all property sectors on a year-to-date basis with a total return of 37.6%, followed by data centers at 28.0%, and specialty at 23.4%.
As the table above reflects, lodging/resorts was the only sector to notch a positive return in September, gaining 0.7%. Health care followed, declining 3.4%, followed by data centers with a decline of 3.8%. Timberland experienced the sharpest pullback on the month, falling 15.5%, followed by telecommunications and gaming, with respective returns of -8.6% and -8.5%.
The FTSE Nareit Mortgage REITs Index fell 13.7% in September, with home financing REITs losing 13.7% and commercial financing REITs down 13.8%. On a year-to-date basis, the Mortgage REITs Index has lost 12.4%, with home financing declining 8.4% and commercial financing dropping 24.0%.