Setback in February REIT Performance

WASHINGTON, DC-After a banner two months, US REITs experienced a setback in February, according to NAREIT. On a total return basis, the FTSE NAREIT All REITs Index fell 0.66% and the FTSE NAREIT All Equity REITs Index fell 0.91% for the month. That compares to a 4.32% gain for the S&P 500.  Year-to-date through February 29, the FTSE NAREIT All REITs Index was up 5.76% and the FTSE NAREIT All Equity REITs Index was up 5.39%. The S&P 500 had gained 9%.

Industrial was the best performing sector for the month, with a 4.68% total return. Retail REITs posted a 1.10% total return in February, while office was down 0.70%.  The multifamily sector’s total return declined 3.83%.

On a year-to-date basis the assets classes followed similar patterns: industrial topped the equity REIT market with a 15.55% total return, retail delivered an 8.21% total return and office returned 7.10%. Apartments were the only equity REIT sector in negative territory with a loss of 0.06%.

On a long term basis, though, prospects for the apartment REIT space are excellent, based on numerous industry reports including, most recently, separate research from NAREIT. It found a record level of pent-up demand for apartment space, with an approximately 2.5-million unit supply-demand imbalance in the apartment space. 

“If anything I don’t think the market appreciates how many people are bunking up with somebody and waiting for the chance to move into their own home,” NAREIT vice president of research and industry information Calvin Schnure, told GlobeSt.com in an earlier interview.

NAREIT also noted that in February the FTSE NAREIT Mortgage REITs Index delivered a 1.19% total return for the month. Home Financing REITs were up 1.24%, and Commercial Financing REITs were up 0.84%. Year to date, FTSE NAREIT Mortgage REITs Index delivered a total return of 8.58%. Home Financing REITs gained 8.25% in the first two months, and Commercial Financing REITs gained 10.86%.