Research - MARCH 12, 2014

REITs continue strong 2014 in February

by Reg Clodfelter

The FTSE NAREIT All Equity REITs Index continued its strong 2014 with total returns in February of 4.67 percent, outpacing the S&P 500 Index by 10 basis points. Year-to-date as of Feb. 28, the index has outpaced the S&P 500 8.13 percent to 1.11 percent. As of the end of February, the dividend yield of the index was 3.59 percent.

Free-standing retail has performed better than any other property sector in 2014, with total returns of 16.37 percent in 2014 and a strong February that saw returns of 7.14 percent. The only sector that outperformed free-standing retail in February was self-storage, which had total returns of 7.33 percent in the month and 12.94 percent so far in 2014. Industrial/office REITs and residential REITs have posted double-digit returns for 2014 at 10.43 percent and 12.09 percent, respectively. Every subsector of industrial/office REITS — industrial, office and mixed — have posted returns in the double digits.

Timber, healthcare and manufactured home REITs were the worst performers in February, with returns of 1.16 percent, 1.02 percent and 1.00 percent, respectively. Of the three, timber REITs are the only sector to have a bad 2014 to date with –3.02 percent in returns. The other two REIT sectors have 2014 returns of more than 9.0 percent. No other sector posted a lower February return than the 3.38 percent return from infrastructure REITs.

The FTSE NAREIT All Equity REITs Index comprises 146 REITs with a total market capitalization of $684 billion. The index has already significantly outpaced its 2013 total return of 2.86 percent in just the first two months of 2014. 

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