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Research - APRIL 4, 2017

REITs drop 1.6% in March

by Loretta Clodfelter

U.S. equity REITs had a total return of –1.57 percent in March, according to the FTSE NAREIT All Equity REITs Index, down from February’s 4.01 percent surge. Year-to-date, equity REITs have a total return of 2.55 percent. In 2016, the sector had a total return of 8.63 percent.

The weakest performance was by retail REITs. The sector was down 5.72 percent in March, with especially poor performances by the shopping center and regional mall subsectors, with total returns of –6.42 percent and –6.23 percent, respectively. The retailing industry was rocked in March by a number of high-profile bankruptcies and store closures. The retail property sector will need to adjust to a shifting retailing environment as the rise of e-commerce sees more sales move online.

Once again, the strongest performance in March was by infrastructure REITs, up 3.55 percent; the sector is up 12.25 percent year-to-date. Other strong sectors were data centers (up 2.57 percent), lodging (up 1.93 percent), timber (up 1.69 percent) and industrial (up 1.32 percent).

REITs’ 2.6 percent return in the first quarter trails the broader equity markets. The S&P 500 Index had a total return of 6.1 percent over the same period.

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