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Portfolio > Alternative Investments > Private Equity

REITs Outperformed S&P 500 in September

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Despite underperforming the broader market in the first three quarters, REITs slightly outperformed the S&P 500 in September, according to the National Association of Real Estate Investment Trusts (NAREIT).

Sectors of the U.S. REIT market that produced strong gains in the first three quarters of the year were Commercial Financing Mortgage REITs, which were up 21.57%; Lodging/Resorts sector, which jumped 17.40%, and the Self-Storage sector, which gained 17.15%.

Other major equity REIT sectors that bumped up during the first three months of the year were the Industrial sector, which was up 7.46%, Timber REITs gained 6.85%, Shopping Centers were up 5.24%, and the Office sector was up 4.92%.

In September, the FTSE NAREIT All REITs Index, the broadest U.S. REIT Index, gained 3.55% on a total return basis, the FTSE NAREIT All Equity REITs Index was up 3.43%, and the FTSE NAREIT Mortgage REITs Index increased 3.69%, compared to an increase of 3.14% for the S&P 500.

NAREIT also reported that REIT IPO activity was strong in the first nine months of 2013. REITs conducted 14 IPOs that raised $3.08 billion in the first three quarters, easily surpassing the $1.82 billion raised in eight IPOs during all four quarters of 2012, NAREIT found.

The third quarter of 2013 was the most active for REIT IPOs with $1.25 billion raised in four offerings, including three that took place in July and raised $1.21 billion.

REITs also continued to reward income-seeking investors in the first three quarters of this year.

At September 30, the dividend yield of the FTSE NAREIT All REITs Index was 4.34%, and the yield of the FTSE NAREIT All Equity REITs Index was 3.68%. Among equity REIT sectors, the Health Care sector led the industry with a 5.08% dividend yield.

“REITs continue to deliver attractive dividends,” said NAREIT President and CEO Steven Wechsler, in a statement, noting that REITs paid out $29 billion in dividends in 2012.

“They also provide portfolio diversification – an important benefit for investors in all market environments – as well as inflation hedging and competitive long-term total return performance.”

The FTSE NAREIT Mortgage REITs Index delivered a dividend yield of 11.33% at September 30, with Home Financing REITs yielding 12.79% and Commercial Financing REITs providing a 7.02 %dividend yield.

By comparison, the S&P 500 provided a dividend yield of 2.14% at the same time.

Check out REIT Restitution, Round 2: 5 Indie BDs Pay Another $10.7M in Massachusetts on ThinkAdvisor.


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