Photo credit: <a href="http://www.freedigitalphotos.net/images/view_photog.php?photogid=2042">phanlop88</a>

The total return of the U.S. real estate investment trust market outpaced the broader equity market over the 12-month period ended March 31, although REITs underperformed the market in the first quarter of 2012, new research reveals.

The National Association of Real Estate Investment Trusts (NARIET), Washington, published this finding in a survey of REIT data derived from publicly traded securities. Members of the association are REITs and other businesses that own, operate and manage income-producing real estate, as well as those firms and individuals who advise, study and service those businesses. 

Over the 12 months ended March 31, the FTSE NAREIT All Equity REITs Index provided a total return of 11.29% and the FTSE NAREIT All REITs Index returned 10.91% compared to the S&P 500’s 8.54%, the survey reveals.  Strong REIT dividends contributed to REITs outperformance of the broader market. 

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%, the study finds.

The total return of the S&P 500 Index for the first quarter of 2012 was 12.59% compared to 10.49% for the FTSE NAREIT All Equity REITs Index and 10.41% for the FTSE NAREIT All REITs Index.  The REIT indexes, however outperformed the broad market in the month of March with the FTSE NAREIT All Equity REITs Index delivering a total return of 4.84% and the FTSE NAREIT All Equity REITs Index returning 4.39% compared to the S&P 500’s 3.29 percent.

REITs also continued to outperform the broader market over longer periods.  Over the three years ended March 31, the total return of the FTSE NAREIT All Equity REITs Index was 42.21% and the return of the FTSE NAREIT All REITs Index was 39.98% compared to 23.42 percent for the S&P 500, the research finds.  The FTSE NAREIT All Equity REITs Index also outperformed the S&P 500 over the past 10, 15-, 20-, 25-, 30-, 35- and 40-year periods.

In the first quarter, REITs delivered the dividend yields many income investors sought in a low interest rate environment.  At March 31, the dividend yield of the FTSE NAREIT All REITs Index was 4.29% and the yield of the FTSE NAREIT All Equity REITs Index was 3.34% compared to 2.14% for the S&P 500 and 2.22% for 10-year U.S. Treasury Notes.  Some REIT sectors offered substantially higher yields than the overall REIT index, including 14.56% for home-financing REITs and 8.57% for commercial-financing REITs.

In the first quarter of 2012, publicly traded U.S. REITs raised a total of $21.2 billion in capital, including $10.6 billion in equity.  By comparison, REITs raised a total of $51.3 billion, including $31.1 billion in equity, in all of 2011, which was the industry’s record year for both total capital and equity capital raised, the study says.

To see the full report, click here.