Fundamentally Speaking: NAREIT T-Tracker Shows Solid REIT Performance

In the latest edition of Fundamentally Speaking, Calvin Schnure, NAREIT’s senior vice president for research and economic analysis, said NAREIT’s T-Tracker series highlights a “solid, sustained” performance for the REIT industry in the third quarter.

NAREIT’s T-Tracker is a comprehensive measure of operating performance for the total listed REIT industry. It looks at funds from operations (FFO), net operating income (NOI) and total dividends paid and reports the data on a quarterly basis.

Schnure, the architect of T-Tracker, noted that total third quarter FFO was $13.4 billion, 2.7 percent higher from the previous quarter and a 13 percent gain from a year ago.  NOI gained 13 percent from a year ago and dividends paid advanced 10 percent from a year ago. “This is good, solid, sustained performance for the industry,” he said.

Turning to the broader economic picture, Schnure commented that economic fundamentals have been somewhat “choppy.” Third quarter gross domestic product (GDP) slowed to 1.5 percent, Schnure observed, while August and September employment numbers were weak, followed by a bounce-back in October.

Schnure pointed out that GDP felt the impact of weak growth abroad and a stronger dollar, which hurt exports and manufacturers.

Meanwhile, lower energy prices put a dent into energy exploration, which impacted employment data.

Schnure stressed, however, that not only are these macroeconomic factors transitory, but they don’t affect REITs.

“You take out these factors and the outlook looks pretty good for sustained growth going forward. I wouldn’t be surprised if we saw continued strong operating performance in our sector,” Schnure said.