WASHINGTON DC—Despite the overall lackluster performance of REITs in 2013-for the first time in five years they underperformed the S&P 500-some sectors did knock out a stellar performance, according to NAREIT.
The commercial financing segment of the mortgage REIT sector delivered a 41.77% total return for the year, NAREIT reports. It was followed by the lodging/resorts sector, which produced a 27.18% total return, and then manufactured homes, which returned 10.46%.
Most REIT market sectors produced single-digit returns for the year, though, with the self-storage sector delivering a 9.49% return; timber REITs 7.86%; the industrial sector 7.40%; free-standing retail rising by 7.29%; and the office sector rising by 5.57%.
Other achievements of note for 2013 for the sector, according to NAREIT:
The industry's capitalization level increased for the year, reaching $670 billion, up from $603 billion at the end of 2012. Also, the number of companies in the FTSE NAREIT All REITs Index rose to 203, up from 172 companies at the end of 2012.
A record level of capital was raised, a trend that appears to be continuing in 2014. Listed REITs raised a total of $76.96 billion of equity and debt in 2013, surpassing 2012's record of $73.33 billion. The 2013 number included $46.22 billion of equity and $30.74 billion of debt.
Tallying up these achievements is important for the industry and its investors, especially given the fears about rising interest rates and their impact on REITs-to say nothing of the sector's performance when stacked against the broader equity market.
The FTSE NAREIT All REITs Index gained 3.21% for the year and the FTSE NAREIT All Equity REITs Index delivered a 2.86% total return. The FTSE NAREIT Mortgage REITs Index fell 1.96%. Meanwhile, of course, the S&P 500 delivered a whopping 32.39% return in 2013.
NAREIT executives maintain that a long-term orientation is what best rewards investors. "Real estate is a strategic more than a tactical investment," says NAREIT President and CEO Steven A. Wechsler, in a prepared statement.
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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.
