The MarketsDecember 3, 2010

REITs Lose Ground in November

REITs nearly tripled the performance of the S&P 500 Index in the first 11 months of the year, although they lost ground in November, according to new data.

Reported by Fred Schneyer

A news release from the National Association of Real Estate Investment Trusts (NAREIT) said the total return of the FTSE NAREIT Equity REIT Index was 22.25% and the total return of the FTSE NAREIT All REITs Index was 21.88% for the first 11 months of the year compared to 7.86% for the S&P 500.

In November, the FTSE NAREIT Equity REITs Index lost 1.96% and the FTSE NAREIT All REITs Index lost 1.62% while the S&P 500 gained 0.01%.

According to the NAREIT data, all sectors of the REIT market were in the black and all but two delivered strong double-digit returns on a year-to-date basis through November 30. Top performing sectors were Apartments (up 41.04%), Free-standing Retail (up 35.28%), Regional Malls (up 32.65%), Lodging/Resorts (up 31.29%) and Shopping Centers (up 23.56%).

On a one-year basis through November 30, the FTSE NAREIT Equity REIT Index delivered a total return of 30.99% and the FTSE NAREIT All REITs Index delivered a return of 29.72% compared to 9.94% for the S&P 500, the NAREIT data showed.

The FTSE NAREIT Equity REIT Index has outpaced the S&P 500 for the past 1-, 3-, 5- , 10-, 15-, 20-, 25-, 30-, and 35-year periods. The REIT index delivered positive returns for eight of those nine periods and double-digit returns for seven of the nine periods. REITs also continued to reward income investors in the first 11 months of 2010, NAREIT said.

The FTSE NAREIT All REITs Index cash dividend yield was 4.58% and the FTSE NAREIT Equity REIT Index cash dividend yield was 3.76% at the end of November, while the S&P 500’s dividend yield was 1.98% and the yield on 10- year U.S. Treasuries was 2.79%.

Finally, NAREIT said, compared to last year’s total $34.7 billion in equity and debt raised, REITs so far this year have raised $42.7 billion — $21.9 billion in secondary equity common and preferred share offerings; $18.8 billion in unsecured debt and $2 billion in nine IPOs.