Research - JUNE 2, 2017

REITs fall 0.1% in May

by Loretta Clodfelter

The U.S. REIT sector declined 0.13 percent in May, according to the FTSE NAREIT All Equity REITs Index. Year-to-date, the index is up 2.86 percent. In April, the sector had a total return of 0.43 percent.

By comparison, the S&P 500 Index was up 1.41 percent in May and has posted a year-to-date return of 8.66 percent.

The equity REIT market’s performance was dragged down by the retail sector, which dropped 7.00 percent in May. All three retail subsectors recorded significant declines in May: shopping centers (–8.65 percent), regional malls (–4.92 percent) and freestanding assets (–9.12 percent). Through May 31, the retail REIT sector had fallen 14.97 percent in the first five months of the year.

Investors continue to be worried about the long-term health of the retail property sector, as the industry is in a state of secular shifts brought on by e-commerce and other changes.

The two strongest REIT sectors in May were infrastructure and data centers, up 5.30 percent and 4.68 percent, respectively. Year-to-date, infrastructure and data centers have had total returns of 21.85 percent and 23.55 percent, respectively.

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