REITs See 10% Returns in First Half of 2011

In the first half of 2011, the FTSE NAREIT All REITs Index was up 9.93% and the FTSE NAREIT All Equity REITs Index was up 10.62% compared to 6.02% for the S&P 500. On a 12-month basis ended June 30, 2011, the FTSE NAREIT All REITs Index was up 32.86% and the FTSE NAREIT All Equity REITs Index was up 34.09% compared to the S&P 500’s 30.69% gain.  

REITs continued to reward income‐seeking investors in the first half. The FTSE NAREIT All REITs Index’s cash dividend yield was 4.32% at June 30 and the FTSE NAREIT All Equity REITs Index’s yield was 3.44% compared to 1.92% for the S&P 500.  

Timber and Self‐Storage REITs led the overall REIT market’s performance in the first half. Timber REITs delivered a total return of 16.69% in the period, while the Self‐Storage sector provided a total return of 15.05%.  

Among the larger REIT market sectors, Apartments led with a 14.11% total return in the first half. The Office sector was up 12.50% in the half, while the Industrial sector was up 11.03%. The Retail sector was up 10.34%, led by the Regional Malls segment, which was up 15.81% in the first six months. 

On a 12‐month basis ended June 30, the Industrial sector led the U.S. REIT market with a 53.09% total return, followed by Apartments with a 44.29% return. The Retail sector delivered a 39.50% total return for the one‐year period led by the Regional Malls segment with a 47.07% return. The Office sector provided a 32.22% total return for the 12 months.  

REITs continued to raise a significant volume of capital in the first half of 2011, the announcement said. Publicly traded REITs raised $36.02 billion in 108 secondary equity and debt offerings as well as five IPOs in the first half of the year. By comparison, REITs raised $47.45 billion in 164 secondary equity and debt offerings and nine IPOs in all of 2010, and $49.02 billion in 199 secondary equity and debt offerings and five IPOs in the industry’s peak capital‐raising year of 2006. REITs have used the capital they have raised to maintain an active pace of property acquisitions in this year’s first half.