LAST YEAR A CRAZY THING HAPPENED TO REITS AS THEY WENT
TO MARKET. INVESTORS SHUNNED THEM, SPOOKED BY A FEDERAL
RESERVE BANK WARNING THAT INTEREST RATES WOULD RISE.
THIS YEAR REITS ARE BACK TO THEIR USUAL TOP FORM.
In January the REIT industry began to get a glimmer that 2014 might be a good year. Certainly, the thinking went, it would have been difficult to be any worse than 2013, when REITs were routed by the S&P 500 Index by a
good 30 percentage points or so.
And as it turned out, January 2014 rocked for REIT investors. On a total
return basis, the FTSE NAREIT All REITs Index rose 3.38%, the FTSE
NAREIT All Equity REITs Index increased by 3.31% and the
FTSE NAREIT Mortgage REITs Index was up 5.96%, according
to NAREIT figures. Meanwhile, the S&P 500 was down 3.46%.
Could it be that the S&P was merely spooked by the emerging
market turmoil characterizing those weeks? Perhaps.
But then… it happened again in February. On a total return
basis, the FTSE NAREIT All REITs Index rose 4.69%, the FTSE
NAREIT All Equity REITs Index increased
4.67% and the FTSE NAREIT Mortgage REITs
Index was up 4.30%. The S&P 500, for its part,
By the end of March the trend was clear: the
FTSE NAREIT All REITs Index rose 8.57% on
a total return basis for the quarter and the
FTSE NAREIT All Equity REITs Index was up
by 8.52%. The FTSE NAREIT
Mortgage REITs Index gained the
most at 11.16%. All of these indices
bested the S&P 500, which was up
1.81% for the quarter.
For Brad Case, VP of research for
the National Association of Real
Estate Investment Trusts, it was
surely a “told you so” moment. Case
and executives from the REIT space
By Erika Morphy