Industry Performance

An investment performance comparison between listed equity REITs and the rest of the U.S. stock market—segmented by sector or by style—highlights the long-term diversification benefits of the listed equity REIT market.

Investments from listed property companies in emerging markets have been especially strong over the past year, according to the FTSE EPRA/NAREIT Global Real Estate Index Series.  Over longer historical periods, however, risk-adjusted returns from listed U.S. equity REITs have outpaced those from listed real estate in both emerging markets and non-U.S. developed markets.

The current bull market for exchange-listed equity REITs has rewarded investors with returns averaging more than 21% per year over the past 8½ years—but by the standards of previous real estate market cycles this one has not even hit its stride yet.

Change to take effect at beginning of 2019.

 An increase in interest rates might be cause for concern if it were predicted to come with no accompanying increase in net operating income—but it’s those changes in net operating income, not the interest rates themselves, that should attract the closest attention of investors in any equity asset such as real estate.

There’s little difference between the income earned by the largest, most sophisticated investors in private equity real estate and the income earned by the smallest individual investors in listed equity REITs. 

Mortgage REITs are an investment in real estate finance that combine high current income with long-term total return and portfolio diversification. MREITs have delivered a 21.2 percent total return over the past year, outpacing most other investments over this period.

Listed equity REITs have generally outperformed small-cap value stocks, posting slightly higher returns but substantially lower volatility and substantially better diversification benefits.