On a year-to-date basis as of March 31, REITs have outperformed broad market equities with the FTSE Nareit All Equity REITs Index posting a total return of 3.8%, while the Dow Jones U.S. Total Stock Market fell 4.0% and the Russell 1000 fell 4.2%.
Significant uncertainty affecting all asset classes emerged over the prior month as the war with Iran has continued. Prior to the conflict, most REIT sectors had accumulated solid year-to-date returns, with the All Equity REITs Index returning 10.5% as of Feb. 27, led by data centers at 22.3%, specialty at 21.8%, and self-storage at 17.3%.
From February 28 to March 31, the All Equity REITs Index narrowly underperformed broader markets, declining 6.1%, while the Dow Jones U.S. Total Stock Market fell 4.9% and the Russell 1000 declined 5.0%.
The yield on the 10-year Treasury rose 0.36% during the month to close at 4.32%, up from 3.96% as of February 27. As of March 31, the dividend yield on the FTSE Nareit All Equity REITs index was 4.00% and the FTSE Nareit Mortgage REITs Index yielded 12.96%, compared to 1.17% for the S&P 500.
As shown in the chart above, data centers, specialty, and retail lead on a year-to-date basis, posting respective total returns of 23.8%, 12.1%, and 6.5%.
As reflected in the chart above, REITs have suffered as the conflict with Iran progressed during March. Data centers rose narrowly, with a total return of 1.3%, while timberlands declined 0.4% and lodging/resorts fell 3.1%.
All REIT sectors except for data centers declined in March, as reflected in the table above. Self-storage, telecommunications, and gaming lagged, with respective total returns of -10.8%, -10.1%, and -8.0%
The FTSE Nareit Mortgage REITs Index fell 4.7% in March. Commercial financing declined 0.7% for the month, while home financing fell 6.2%.