The Markets May 5, 2011

All REIT Sectors Deliver Strong Returns in April

On a total return basis, the FTSE NAREIT All Equity REITs Index gained 5.11% and the FTSE NAREIT All REITs Index was up 4.89% in April, compared to 2.96% for the S&P 500.
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According to the National Association of Real Estate Investment Trusts (NAREIT), for the first four months of the year, the FTSE NAREIT All Equity REITs Index was up 13.00% and the FTSE NAREIT All REITs Index was up 12.02% compared to the S&P 500’s 9.06% gain. On a 12-month basis ended April 30, REITs strongly outperformed the S&P 500, with the FTSE NAREIT All Equity REITs Index up 22.88% and the FTSE NAREIT All REITs Index up 22.37% compared to the S&P 500’s 17.22%.  

The Office sector topped other major REIT market sectors in April with a 6.87% return. Apartments and Retail followed closely with 6.59% and 6.55% returns, respectively. The Retail sector was led by Regional Malls with a 7.15% return. The Industrial sector delivered a 2.33% return for the month.  

Offices also topped other major sectors for the first four months of 2011 with a 15.01% return, followed by Apartments with a 13.91% gain; Industrial with 13.77% and Retail with 11.36%. Regional malls again topped the Retail sector with a gain of 13.90%. For the 12 months ended April 30, Apartments were up 31.52%; Industrial was up 28.5%; Retail was up 25.22% (led by Regional Malls, up 29.43%); and Office was up 19.37%.  

REITs also continued to deliver strong yields for income investors. The top performing sector was Home Financing Mortgage REITs with a yield of 14.18% at April 30. The FTSE NAREIT All REITs Index delivered a 4.09% yield at April 30, compared with a 2.89% yield for the Barclays U.S. Agg. Corporate Bond Index and a 1.90% yield for the S&P 500.  

Industry data as of April 30, 2011 includes: 

  • Total equity market capitalization = $455 billion 
  • Equity REIT market capitalization = $412 billion 
  • REITs own approximately $500 billion of commercial real estate assets, or 10% to 15% of total institutionally owned commercial real estate 
  • 158 REITs are in the FTSE NAREIT All REIT Index 
  • 140 REITs are traded on the New York Stock Exchange 
  • NYSE listed REITs equity market capitalization = $445 billion 
More information is at http://www.nareit.com.

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