The National Association of Real Estate Investment Trusts (NAREIT) says REITs' second-quarter operating performance recovered sharply from declines in the past two quarters.
After dipping slightly in the last quarter of 2014 and falling another 3.5% in the first quarter of this year, funds from operations for all listed U.S. equity REITs recovered 16.6% to almost $13 billion in the second quarter, according to the NAREIT T-Tracker, which measures quarterly performance of the entire U.S. stock exchange-listed REIT industry. After six months of subdued but positive year-over-year performance, FFO is up 16.5% in the second quarter, the group announced Thursday.
"REITs are benefiting from the longer-term commercial real estate up cycle and from near-term strengthening of the U.S. economy this spring," NAREIT President and CEO Steven Wechsler said in a statement. "The economy has regained momentum with healthy demand growth following a sluggish winter."
In spite of that momentum, share prices are down. According to FTSE and NAREIT, the total return for the FTSE NAREIT All REIT Index is up just over 1% in 2015, but REIT prices fell 1.34% year to date and 9.91% in the second quarter. By comparison, the S&P is up 2.34% for the year through Aug. 19.
REITs' dividend yield so far this year is close to 4.1% vs. 4% in 2014.
The FTSE NAREIT All-REIT Index had a nearly 9% drop in its total return in Q2, after rising 4% in Q1. So far in Q3 (Aug. 1-19), though, the index has produced a total return of nearly 6.6%.
