Portfolio Adviser Says REITs Improve Long-Term Returns

In the latest episode of the NAREIT Podcast, Creede Murphy, vice president and investment analyst with American Assets Capital Advisers, discussed his firm’s research on REITs’ role in optimized investment portfolios.

Murphy said performance data show REITs have “typically” outperformed major asset classes over “just about any [long-term] time period.” REITs do have “slightly higher” volatility than stocks, according to Murphy.


REIT Returns Slide in April

REIT returns lost ground in April as broader macroeconomic factors  exerted pressure throughout the sector.

The total returns of the FTSE/NAREIT All REIT Index slipped 4.7 percent in April, while the S&P 500 Index gained 1.0 percent. The yield on the 10-year Treasury note rose 0.1 percent for the month.

Jeffrey Langbaum, senior REIT analyst at Bloomberg Intelligence, said negative economic indicators released in April, including weaker-than-expected first quarter gross domestic product, caused a pullback in REIT share prices.


REIT Returns Up in March on Encouraging Fundamentals

REIT returns climbed in March and outpaced the broader market as investors remained encouraged by the outlook for fundamentals in the sector, according to analysts.

The FTSE NAREIT All REITs Index had a total return of 1.2 percent in March, while the S&P 500 Index slipped 1.6 percent.  The 10-year Treasury note dropped 0.1 percent in the month.

For the year, the FTSE NAREIT All REITs Index is up 4.1 percent, whereas the S&P 500 is up 1.0 percent.


Lazard Portfolio Manager Sees REIT Returns of 10 to 15 Percent in 2015

Jay Leupp, managing director and senior portfolio manager at Lazard Asset Management, joined REIT.com for a video interview during NAREIT’s 2015 Washington Leadership Forum.

After a solid performance for REITs in 2014, “we do think there’s still room to run” in 2015, Leupp said.

“We don’t think rates are going to rise as much as most pundits,” he said. “We do still see very strong real estate fundamentals… and we still see rent growth and earnings growth tracking ahead of inflation. In our view, this adds up to a pretty good year for REITs.”

Jay Leupp


Analysts See Solid Returns for REITs in 2015

Although unlikely to match the returns of 2014, positive fundamentals have REITs in position to sustain a solid performance in 2015, according to market observers.

The FTSE NAREIT All REITs Index had a total return of 27.2 percent for 2014, compared to a return of 13.7 percent for the S&P 500 Index.

“It was a pretty sensational year for REITs,” said Rich Moore, managing director at RBC Capital Markets. “Going forward, you’re going to have a positive year on the fundamentals side, no question about it.”


Quick Study: REITs Post Above-Average Historical Returns in 2014

In the latest edition of Quick Study, Brad Case, NAREIT’s senior vice president for research and industry information, highlighted the REIT market’s outperformance of the broader stock market during 2014. He also suggested that investors pay close attention to supply conditions in 2015.

The FTSE NAREIT All REITs Index had a total return of 27.2 percent for 2014, compared to a return of 13.7 percent for the S&P 500 Index.


REIT Returns Outpace Broader Market in Solid First Half Showing

REIT returns doubled up the broader market during the first half of 2014, helped by low interest rates and muted supply, according to industry observers.

As of July 7, the FTSE NAREIT All REITs Index has had a total return of 16 percent, compared with 8.1 percent for the S&P 500 Index.

“The first half of the year has surprised us a little bit with how strong the REIT performance has been,” said Todd Lukasik, Morningstar senior analyst.