Research - JULY 17, 2015

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REIT returns fall in first half of the year

by Zoë Wolff

The FTSE NAREIT All REITs Index, which comprises 224 REITs with a combined equity market capitalization of $890 billion, fell 5.24 percent in the first half of 2015. The FTSE NAREIT All Equity REITs Index and the FTSE NAREIT Mortgage REITs Index dropped 5.44 percent and 5.09 percent, respectively, in the first half of the year. In the same period, the total return of the S&P 500 Index climbed 1.23 percent.

While REIT returns are trailing the broader equity markets, real estate fundamentals are strong, suggesting a mismatch between pricing and value. According to the National Association of Real Estate Investment Trust’s July 2015 Media Brief, REITs are well positioned, with rising rents and occupancy rates reinforced by limited supply and development. However, REIT returns are not reflective of the market fundamentals.

“Stock exchange–traded equity REITs have had trouble in the early part of this year because of concerns among investors o

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