Like the Rest of the Market, REITs Took a Hit in May

WASHINGTON, DC-Weak job numbers. A crisis brewing in Greece and possibly the rest of the Eurozone. May was not a pretty month for the markets, and REIT performance duly reflected that. NAREIT reports that the FTSE NAREIT All REIT Total Return Index dropped 3.95% in May, in large part due to the economic uncertainty.

The broader markets took a hit as well, NAREIT vice president of research and industry information Calvin Schnure tells GlobeSt.com. The S&P 500, Dow Jones Industrials, Russell 2000 and NASDAQ all dropped between 6% and 7.19% for the month. Year to date, however, REITs are up approximately 6% and retail REITs are up 11%.

“It was a difficult month for everyone,” Schnure says. “Part of that was due to the string of economic reports that came in weaker than I had expected. However, the market is usually good about handicapping data like that.” What it is less adept at, he says, is digesting political uncertainty such as what is going on in Europe. Schnure thinks REITs will weather what storm comes out of Europe fairly well, barring a rapid disintegration of the euro--which he takes pains to say he is not predicting. “Sorry, my crystal ball doesn’t do European politics,” is how he puts it. However, he notes that in general, US REITs are less exposed to Europe than the broader market.

In the bigger picture, he says, the fundamentals for the improvement of REITs are still on track. Also, while the economic reports of late have been disappointing, Schnure does point to the increasing consumer sentiment registered in May. “The consumer is hanging in through some tough plays right now, which is good news. REITS will have to weather some uncertainty week to week and month to month for the time being, but overall we’re still in a broad improving trend.”