(Mark Your Calendars: RealShare Apartments East, February 15th in Washington, DC).
WASHINGTON, DC-US REITs turned in a strong performance for January, outpacing the broader equity market. On a total return basis, the FTSE NAREIT All REITs Index gained 6.47% and the FTSE NAREIT All Equity REITs Index was up 6.36% for the month. This compares to 4.48% for the S&P 500, according to NAREIT, which tracks these figures.
In addition, NAREIT reported that, on a 12-month basis ended January 31, the FTSE NAREIT All REITs Index was up 10.21% and the FTSE NAREIT All Equity REITs Index was up 10.61%, while the S&P 500 was up 4.22%.
All sectors of the REIT market did well, but the strongest performance was the lodging/resorts sector’s 10.87% total return. Industrial, up 10.39%, also did well.
There is a reason these two sectors outperformed other trust asset classes, Brad Case, NAREIT’s senior vice president of research and industry information, tells GlobeSt.com: They were the two sectors most likely to benefit from an improved economy, or at least investors’ perception that the economy is improving. “These segments are especially sensitive to the overall state of the economy and they were hurt the most when investors started to fear that the downturn in Europe and US debt issues would drag down the US recovery,” he says. As those concerns began to dissipate at the end of the year, hotels and lodging REITs experienced a larger bounce.
One economic headwind that will benefit trusts is the $100 billion in commercial real estate debt that will need to be refinanced this year, Case adds. This will be a year of significant acquisitions for REITs, he predicts, in large part because they will be on the prowl for bargain-priced, under-water properties. “The five-year debt that’s coming due this year was underwritten at the peak of the market. REITs have been maintaining strong balance sheets so they have the capacity to tap both the equity and debt markets to acquire this paper and these properties.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
