In the latest edition of Quick Study, Brad Case, NAREIT’s senior vice president for research and industry information, offered an analysis of the REIT market’s performance in September.
The FTSE/NAREIT All REIT Index saw its total returns climb 3.6 percent for the month. That beat the broader market, with the S&P 500 down 3.1 percent in August.
Equity REITs were up approximately 3.2 percent in August, while mortgage REITs’ total returns grew by roughly 3.7 percent.
Case noted that the performance of the REIT market in September stood in stark contrast to the months immediately preceding it.
“In the three or four months before September, REITs had been outperformed by the broad stock market,” Case said. “Historically speaking, usually it’s REITs that outperform the broad stock market.”
Case also pointed out that the strong performance by REITs was widespread throughout the industry.
“Another striking fact is that it was across most of the REIT market,” he said. “All parts of the REIT market outperformed the broad stock market, and it was a very good month for investors in REITs.”
The lodging and self-storage sectors had the highest returns for the month.
“It has been a tough economic downturn, and that has really affected lodging REITs,” Case said. “We’ve seen them coming back more strongly, so that’s nice to see.”
Case emphasized the strong returns across the REIT market, though.
“There was really no segment of the REIT market that performed badly during September,” he said.
Case also discussed the longer-term performance of REITs versus the broader market.
“2013 has been a great year for the recovery of the broad stock market,” he said. “REITs had recovered earlier, so 2013 hasn’t been such a strong year for REITs relative to the broad stock market. Yet, after all that tremendous performance in the stock market this year, if you look at the last 10 years, REIT investors have gotten 9.7 percent per year in total returns, whereas in the stock market, it has been 7.6 percent. That outperformance by the REIT market is true of, literally, every longer historical period as well.”