03/14/2024 | by

WASHINGTON, D.C. (March 14, 2024) New data from the fourth quarter of 2023 show that REITs continue to have well-structured debt—79% of REITs’ total debt was unsecured, while 91% of listed REITs’ total debt was at a fixed rate, according to the Nareit Total REIT Industry Tracker Series (T-Tracker®) report released today.

Fourth quarter 2023 data also show that REIT balance sheets remain resilient and well-positioned for the ongoing high interest rate environment. On average:

  • Leverage ratios were low with debt-to-market assets at 33.2%.
  • Weighted average term to maturity of REIT debt was nearly 6.5 years.
  • Weighted average interest rate on total debt was 4.1%.

In addition, the average occupancy for all equity REITs was steady at 93.1%. Average occupancy levels were particularly strong for the traditional REIT sectors outside of office. 

  • Industrial: 96.9%
  • Retail: 96.5%
  • Apartments: 95.7%
  • Office: 88.1%

“REITs’ balance sheets are in good shape, largely because REITs continue to exercise great discipline in managing them,” said Nareit Executive Vice President of Research & Investor Outreach John Worth. “That discipline, combined with REITs’ solid occupancy rates, is enabling REITs to navigate tighter credit conditions and the uncertainty surrounding when the Federal Reserve will cut rates.”

Year-Over-Year Increases in NOI Illustrate REITs’ Sound Fundamentals

T-Tracker data demonstrate that despite ongoing macroeconomic uncertainty, REITs displayed sound fundamentals during the fourth quarter. Specifically:

  • Net Operating Income (NOI) was $28.6 billion—a 2.4% rise from one year ago.
  • Same Store NOI experienced 3.6% year-over-year gains, underscoring that REITs are keeping pace with inflation.

REIT Operational Performance Experiences Modest Gains

At the industry level, funds from operations (FFO) for all equity REITs was $18.8 billion, representing a modest gain of 1.6% year-over-year. Most of this moderation in growth was driven by isolated issues in four sectors: Diversified, Healthcare, Industrial, and Telecommunications. These issues were not indicative of the industry, as they were related to currency expenses and non-U.S. operations, among other things. Accounting for these issues, FFO increased 5.8% year-over-year.

For more data, please read the complete Q4 2023 Nareit T-Tracker report.

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