REITs Down Through September

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While real estate investment trusts performed better than other investment avenues, their total returns down 1.25% at the end of September, based on the FTSE NAREIT index series maintained by the National Association of Real Estate Investment Trusts.

Taking into account only equity REITs, the performance was even better, with a total return of 1.76%, the Washington-based REIT industry trade association reports. However, considering only mortgage REITs, returns are a negative 31% for the performance through September 30.

In comparison, the S&P 500 is down 19.29% for the first nine months of the year, the Dow Jones Industrial Average lost 18.2%, and the NASDAQ Composite has declined more than 21%.

The steady payout of REIT dividends is one factor behind this relatively good performance of the REIT sector. Lodging REITs were the worst performing sector, turning in a negative return of more than 26% through the end of September.

Industrial and office REITs were also down with a negative return of about 9% for the period. Retail REITs overall were down about 4%, with regional malls losing more than 11%.

Self-storage REITs were the best performing of all the REIT sectors, with total returns of more than 33% at the end of September. This is partly due to “strong fundamentals created by greater customer demand,” according to NAREIT. Health care REITs, another sector that is seen as a defensive play for a slow economy, turned in a total return of about 18.5%.

The residential REIT category, which includes both the apartment REITs and manufactured home REITs, gained more than 17%. And specialty REITs, a category that includes a few REITs that can’t be easily classified into the other categories, were up more than 11%.


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