Research - JULY 10, 2017

REITs return 2.0% in June

by Loretta Clodfelter

U.S. equity REITs recorded a total return of 1.96 percent in June, according the FTSE NAREIT All Equity REITs Index. The sector outperformed the broader market during the month, as the S&P 500 Index recorded a monthly gain of 0.5 percent. In May, REITs fell 0.13 percent, trailing the broader stock market.

Year-to-date is a different story, however, as the FTSE NAREIT All Equity REITs Index had a 4.88 percent return in first half 2017, lagging the 8.2 percent return of the S&P 500 Index in the first six months of the year.

By property sector, the biggest gains in June were in sectors that had struggled throughout 2017 — healthcare REITs returned 3.50 percent and retail REITs returned 3.49 percent, led by a 4.40 percent return in the regional mall subsector. Retail REITs have been affected by wider market sentiment regarding the retail sector, which faces challenges from rising bankruptcies and the shift toward e-commerce.

On the other side of the coin, data center REITs, which have been one of the strongest REIT sectors in 2017, with a year-to-date return of 21.68 percent, saw investors pull money off the table. The sector fell 1.51 percent in June, the worst performance of any property type.

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