3 REIT Sectors That Beat S&P 500

For 12 months ending March 31, REIT returns were robust thanks to dividends

While the S&P 500 did better than REITs for the first quarter of 2012, over the 12-month period ending March 31, REITs actually performed better than the market, thanks in part to dividends.

For that one-year period, the FTSE NAREIT All Equity REITs Index provided a total return of 11.29% and the FTSE NAREIT All REITs Index returned 10.91%; over the same span, the S&P 500 provided 8.54%. As an indicator of the major role dividends played, the price-only return of the FTSE NAREIT All Equity REITs Index over the 12-month period was 7.26%, and the price return of the FTSE NAREIT All REITs Index was 5.84%.

In Q1 of 2012, the S&P’s total return was 12.59% while the FTSE NAREIT All Equity REITs Index returned 10.49% and the FTSE NAREIT All REITs Index returned 10.41%. however, the REIT indexes outperformed the broad market for the month of March; the FTSE NAREIT All Equity REITs Index brought home a total return of 4.84% and the FTSE NAREIT All Equity REITs Index 4.39%, while the S&P 500 produced 3.29%.

Heres a look at how individual REIT sectors did compared to the S&P 500:

(Photo: AP)1. Industrial/Office Sector

The industrial/office sector did not fare well in 2011, providing negative returns for the year in all segments except mixed. However, for the month of March returns were positive, and for the current year to date returns are strong, particularly in the industrial and mixed subsectors.

On the other hand, the S&P 500, while it did considerably better for the month of March, was outpaced by the industrial/office sector for Q1 of this year.

 

Industrial/Office:

  Industrial

  Office

  Mixed

S&P 500

2011

-1.47%

-5.16

-0.76

2.67

2.11

March 2012

4.41%

6.97

3.34

4.46

12.59

Q1 2012

14.66%

23.61

10.67

17.70

3.29

(Photo: AP)2. Retail

Retail spaces varied widely in how they did in 2011, with regional malls outperforming the other retail subsectors by a wide margin, jumping 22%, and coming in as the top performer of the three REIT sectors highlighted this slideshow. The retail sector overall brought in a hefty return for the year, many times the yield of the S&P 500 for the same period.

While the market outshone retail REITs for the month of March by a substantial margin, though, the first quarter of 2012 was a good one for the retail REIT sector, with two out of three subsectors returning in the double digits and helping the sector overall far outpace the S&P 500.

 

Retail:

  Shopper Centers

  Regional Malls

  Free Standing

S&P 500

2011

12.20%

-0.73

22.00

0.43

2.11

March 2012

5.87%

4.34

7.02

3.26

12.59

Q1 2012

14.56%

14.86

15.17

8.89

3.29

(Photo: AP)3. Residential

Residential REITs were the winners for 2011, with manufactured homes the better of the two subsectors. Both subsectors handily beat the S&P 500 for the year.

The story could repeat in 2012, even though the S&P 500 beat out REITs for the month of March—the sector’s returns are considerably ahead of the market for the first quarter of the year.

 

Residential:

  Apartments

  Manufactured Homes

S&P 500

2011

15.37%

15.10

20.38

2.11

March 2012

8.36%

8.54

5.41

12.59

Q1 2012

8.49%

8.47

9.02

3.29

 

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