WASHINGTON, DC—The REIT sector extended its outperformance streak across the first three quarters of 2016, NAREIT said Tuesday. All of the association's benchmark indices for REIT performance have outpaced the S&P 500 on both a year-to-date and trailing-12-month basis.

The FTSE NAREIT All REITs Index posted YTD returns of 12.57% for the nine months that ended Sept. 30 and 12-month returns of 20.60%. For the FTSE NAREIT All Equity REITs Index, total YTD and 12-month returns were 12.31% and 20.94%, respectively, while the FTSE NAREIT Mortgage REITs Index delivered YTD returns of 20.16% and 12-month returns of 18.89%. In comparison, the S&P 500's YTD return was 7.84% and its 12-month return was 15.43%.

Within the equity REIT universe, four property sectors delivered total returns of more than 20% for the first three quarters of this year. They were led by freestanding retail with 34.45%, followed by industrial with 31.07%, single-family rentals with 29.08% and data centers with 25.39%. Home financing REITs led the mortgage REIT index with a 22.96% total return for the first nine months.

The REIT indices also outperformed the S&P 500 in terms of dividend yields. As of Sept. 30, the dividend yield of the All REITs Index was 4.05% and the yield of the All Equity REITs Index was 3.70%, both nearly double that of the S&P 500's yield of 2.12%. The dividend yield of the FTSE NAREIT Mortgage REITs Index was 10.23%. Among individual equity REIT segments, specialty REITs performed best with 6.31%.

“With their highly competitive total returns, as well as their strong ability to generate income and provide critical portfolio diversification, REITs have continued to demonstrate why they should be a core allocation in investment portfolios in all investment environments,” says NAREIT president and CEO Steven Wechsler. They've also garnered strong support from the public markets: $59.1 billion in debt and equity for the first nine months of the year, nearly equal to the 12-month total of $59.3 billion for 2015.

REITs have also strengthened their balance sheets over the past year. The debt ratio of the All REITs Index was 40.6% at Sept. 30, down from 45.1% a year ago, while for the All Equity REITs Index it was 31.0%, down from 34.1% at the same time last year.

Instant Insights /

REITs Continue to Excel S&P 500

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