Calvin Schnure

REITs and other owners of commercial properties are likely to benefit from a favorable balance of supply and demand in the months ahead.

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.

Single Family Home Rental REITs have established themselves as long-term players providing additional housing options at a time when the housing market continues to recover. 

The listed REIT industry continues to grow and prosper. Total Funds from Operations (FFO) of listed Equity REITs rose 7.9 percent in the second quarter, to $15.6 billion, according to the NAREIT T-Tracker®. 

Nonfarm payrolls rose 209,000 in July, signaling that the economy has good momentum at mid-summer, while office jobs in Gateway Cities have rebounded in recent months.. 

Commercial real estate markets appear to have settled in for the long haul. New supply and the growth of demand are roughly balanced in most property sectors, vacancy rates are stable and rents growing modestly.

The $64 million question in commercial real estate today is whether or not the sector is past its peak and headed for a slowdown.

Equity REITs reported a 7.4 percent gain in funds from operations in the fourth quarter, according to recently-released T-Tracker® data.

The data show positive fundamentals entering the New Year. Supply remains in check, and demand growth is sustained, despite some bumps along the way. 

How well are stock-exchange listed Equity REITs positioned for the interest rate environment ahead?