The total return of the U.S. real estate investment trust (REIT) market outpaced the broader equity market over the 12-month period ended March 31, although REITs underperformed the market in the first quarter of this year, according to new data from the National Association of Real Estate Investment Trusts (NAREIT).
NAREIT reports that the FTSE NAREIT All Equity REITs Index over the 12-month period ending March 31 provided a total return of 11.29% and the FTSE NAREIT All REITs Index returned 10.91%, higher than the S&P 500's 8.54% rise during the same period. However, the total return of the S&P 500 Index for the first quarter of this year 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.
However, NAREIT notes that the REIT indices outperformed the broad market in March, with the FTSE NAREIT All Equity REITs Index delivering a total return of 4.84% and the FTSE NAREIT All REITs Index returning 4.39%, while the S&P 500 only returned 3.29%.
In the first quarter of this year, 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. At Dec. 31, 2011, the debt ratio for the U.S. equity REIT industry (the industry's total debt as a percent of its total debt and equity market capitalization) stood at 38.6%, down from 39.8% a year earlier.
Industrial REITs led the industry in first-quarter return performance, delivering a total return of 23.61%. Among other major equity REIT market sectors, retail provided a 14.56% total return, led by regional malls with a total return of 15.17%. Lodging REITS returned 13.49%, the office sector returned 10.67% and multifamily residential REITs returned 8.49%.
‘REITs are well capitalized and well prepared to make strategic acquisitions in 2012,’ says Steven A. Wechsler, NAREIT's president and CEO. ‘Those opportunities are likely to present themselves this year, as $20 billion in five-year commercial real estate loans made at the peak of the last real estate cycle come due – many of which will have difficulty being refinanced.’