Equity REITs fell 3.2 percent in May, according to the FTSE Nareit Equity REITs Index, which excludes timber, infrastructure and mortgage REITs. On a year-to-date basis, equity REITs are basically flat with a total return of 0.2 percent. By comparison, the S&P 500 Index is up some 10 percent so far this year.
Rising interest rates and the regional banking crisis have put a damper on REIT performance. “After a promising start to the year, global REITs have now given back most of those gains, as well as their initial outperformance against equities,” said Todd Kellenberger, client portfolio manager of real estate securities for Principal Asset Management. “Much of the relative underperformance to equities came in March, as the prospect of a banking crisis–driven credit crunch weighed heavily on the capital-intensive real estate sector.”
Office REITs have seen the biggest decline in 2023, down 24.1 percent in the first five months of the year. Office REITs d