04/08/2019 | by

Double-digit Returns Across Property Sectors

WASHINGTON, D.C. April 8, 2019 – REITs outperformed the broader stock market in March and in the first quarter of 2019, Nareit reported. The FTSE Nareit All REITs Index, the broadest U.S. REIT index containing both equity and mortgage REITs, gained 4.22 percent on a total return basis in March and 16.7 percent in the year’s first quarter, compared to the S&P 500’s 1.94 percent gain in March and 13.65 percent in the first quarter.

The FTSE Nareit All Equity REITs Index, which includes 169 equity REITs, advanced 4.45 percent in March and 17.17 percent in the first quarter of 2019, while the FTSE Nareit Mortgage REITs Index, which includes 35 home and commercial financing REITs, rose 1.93 percent in March and 10.11 percent in the first quarter.

Infrastructure Sector Leads With 21.4 Percent Return

Almost all equity REIT property segments delivered double digit total returns in this year’s first quarter and eight segments had returns greater than the FTSE Nareit All Equity REITs Index’s return. The infrastructure segment, which consists primarily of cell tower REITs, was the top performing property segment with a total return of 21.35 percent. The industrial sector, which consists primarily of logistics facilities and is a key component in eCommerce, was close behind infrastructure with a 21.28 percent total return. The timber REIT segment was the third-best performer with a 21.11 percent total return.

Other property segments whose total returns outpaced the FTSE Nareit All Equity REITs Index in the first quarter of the year were:

  • Office - up 20.31 percent
  • Data Centers - up 20.16 percent
  • Shopping Centers - up 18.21 percent
  • Single Family Homes - up 18.19 percent
  • Manufactured Homes - up 17.85 percent

Among mREITs, commercial financing REITs led the market with a 13.69 percent total return for the first quarter, while home financing REITs delivered an 8.74 percent return.

“REITs are total return stocks that offer investors the combination of competitive share price returns and strong, continuing dividend income,” said Nareit President and CEO Steven A. Wechsler. “Those attributes, along with relatively low correlation with other segments of the stock market, make REITs an important component of well-designed portfolios for investors of all types.”

REITs Reward Income Investors

REITs continued to offer attractive dividend yields in the first quarter. The dividend yield of the FTSE Nareit All REITs Index at the end of the quarter was 4.13 percent, the dividend yield of the FTSE Nareit All Equity REITs Index was 3.72 percent and the dividend yield of the FTSE Nareit Mortgage REITs Index was 10.61 percent, compared to 2 percent for the S&P 500.

  • Specialty - 6.24 percent
  • Lodging/Resorts - 5.30 percent
  • Health Care - 5.24 percent
  • Regional Malls - 5.02 percent
  • Diversified - 4.93 percent
  • Timber - 4.82 percent
  • Shopping Centers - 4.73 percent
  • Free Standing Retail - 3.98 percent

REIT Balance Sheets Remain Solid

The U.S. equity REIT industry has maintained low leverage, with a debt ratio of 32.3 percent. In the first quarter of 2019, publicly listed REITs raised a total of $19.6 billion in 57 equity and debt offerings, up from $15.8 billion in 37 equity and debt offerings in the first quarter of last year. In this year’s first quarter, REITs raised $7.3 billion in secondary offerings of common equity; $849 million in preferred shares and $11.4 billion in unsecured debt.

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