NEW YORK CITY-So what if REITs didn't outpace the broader equity markets in the opening three months of the new year? Two newly issued reports show that the market sector is nevertheless thriving and continuing its market-leading pace.
Equity markets outperformed REITs in the first three months of the new year, reports NAREIT, even though trusts had the upper hand on the 12-month basis ended on March 28. What's more, virtually all sectors with the REIT market posted first-quarter positive—often double-digit—returns.
“The FTSE NAREIT All REITs Index delivered a 9.11% total return,” the group reports, “and the FTSE NAREIT All Equity REITs Index delivered a total return of 8.1%.” This compares to the S&P 500's return of 10.61%. For the year-long period mentioned before, the All REITs index returned an 18.73% while the S&P 500's return was 13.96%.
And while all segments were strong, it was mortgage REITs that led the charge in Q1, with a 17.84% total return. “Among major equity REIT sectors, timber returned 15.47%; healthcare's return was 14.67%; lodging/resorts delivered 13.71%; and industrial returned 11.59%.
“REITs continued to reward their shareholders with all the benefits of real estate investment,” said NAREIT president and CEO Steven A. Wechsler in the association's statement. “They did so while also providing the advantages of liquidity and moderate leverage.”
In the meantime, SNL is reporting that three REIT IPOs—CyrusOne, Gladstone Land and Aviv REIT—were completed in Q1, and each one has outperformed the market since their offerings. At $361.5 million, $56.7 million and $303.6 million respectively, the total IPO calculates to $720.8 million.
CyrusOne, a data center REIT, posted a 25.24% return, leaving in the dust SNL's US REIT Equity Index by a whopping 19.69%. Farmland-focused Gladstone posted a return of 6.22%. The company's performance bested the SNL US REIT Equity Index return of 3.73% by 2.49 percentage points. Healthcare REIT Aviv posted a return of 20%, outpacing the US REIT Equity Index by 17.68 percentage points.
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John Salustri
John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.
