REITs Weaken Slightly Less Than Equities in August: NAREIT

The FTSE EPRA/NAREIT Europe Index delivered the best performance of any region, with a total return of 6.1% for the year through August, while Middle East/Africa delivered gains of 0.2%. The FTSE EPRA/NAREIT Americas Index declined 8.1% year to date, and the Asia/Pacific index is down 8.3%.

On a five-year basis, the average annual total returns of the FTSE NAREIT ALL REITs Index underperformed the S&P 500: 12.4% vs 15.9%, respectively. The same is true of the 10-year results, which are 6.6% for REITs and 7.2% for the S&P.

However, on a longer-term basis, REITs top their S&P counterparts. The 15-year average annual total return for the All REITs Index is 10.9% vs. 3.8% for the S&P 500. On a 20-year basis, REITs produced an average yearly total return of 10.7% vs. 8.5% for the S&P 500.

In August, NAREIT said that REITs’ second-quarter operating performance recovered sharply from declines in the past two quarters.

After dipping slightly in the last quarter of 2014 and falling another 3.5% in the first quarter of this year, funds from operations for all listed U.S. equity REITs recovered 16.6% to almost $13 billion in the second quarter, according to the NAREIT T-Tracker, which measures quarterly performance of the entire U.S. stock exchange-listed REIT industry.

After six months of subdued but positive year-over-year performance, FFO is up 16.5% in the second quarter, the group announced. “REITs are benefiting from the longer-term commercial real estate up cycle and from near-term strengthening of the U.S. economy this spring,” NAREIT President and CEO Steven Wechsler said in a statement at the time. “The economy has regained momentum with healthy demand growth following a sluggish winter.”

— Check out In Alts Investing, Managing Expectations Is Top Priority on ThinkAdvisor.