- Economic Contribution of REITs in the United States
Nareit commissioned EY to estimate the current economic contribution of all U.S. REITs (including public listed, public non-listed, and private REITs) in the United States. The total economic contribution of U.S. REITs in 2023, the most recent year of complete information, was an estimated 3.5 million full-time equivalent (FTE) jobs and $278 billion of labor income. The total economic contribution, or “footprint,” of REITs consists of the direct operations of REITs and related businesses in the United States, as well as the impacts from dividend and interest payments by REITs and REIT property improvement and construction investments. - Analysis Shows the Optimal Allocation to REITs over Lifestages
A 2024 Morningstar Associates analysis, sponsored by Nareit, found that the optimal portfolio allocation to REITs ranges from 4.2% to 20.0% across a range of lifestages. For investors with a 45-year to 25-year time horizon, the optimal allocation to REITs is 20.0%. The optimal allocation to REITs gradually declines over time from 11.0% for investors at retirement to 4.2% for investors 15 years into retirement. - REIT Active Management Adds Net Value to CRE Portfolios
CEM Benchmarking’s 2024 study, sponsored by Nareit, shows that REIT active management has consistently added net value in CRE portfolios. The study spans a 24-year period (1998–2021) and uses a unique data set representing more than 350 U.S. institutional investors, primarily defined benefit (DB) pension funds. Portfolio performance is measured against the investor’s chosen benchmark. - CEM Study Shows REITs Outperform Private Real Estate by Nearly 2.3% in DB Plans
CEM Benchmarking’s 2023 study, sponsored by Nareit, provides a comprehensive look at realized investment performance across asset classes over a 24-year period (1998-2021) using a unique dataset covering more than 200 public and private sector pensions with nearly $4.4 trillion in combined assets under management. One of the unique benefits of the CEM dataset is that it provides the actual realized performance of the assets chosen by plan managers and trustees. - Study Confirms REIT Sustainability Outperformance
A peer-reviewed, academic study, provides the first meaningful analysis comparing the sustainability performance of REITs and Private Equity Real Estate (PERE) funds, as well as an analysis of the relationship between sustainability reporting and the financial performance of REITs. - Generalist Investor Perception of REITs Stronger Today Than in 2018: Rivel
Gene Rubin, president of management consultancy firm Rivel, joined Nareit Senior Vice President for Investment Affairs Abby McCarthy for a Sept. 28 webinar that explored Rivel’s 2018 and 2022/23.research into generalist investor perceptions of REITs.
*This content is for Nareit members only* - These Morningstar® Fact Sheets examine past REIT performance for the 51-year period ending December 31, 2022 (the longest period for which data are available):
Largest increase — Compared to bonds, T-bills and other stocks, REITs provided the largest increase in wealth in over 50 years.
Increased returns — Adding REITs to a hypothetical portfolio increased returns with no increase in risk.
Extended lifespan — Adding REITs to a hypothetical portfolio reduced the risk of outliving assets for retirees. - Morningstar Analysis Shows Importance of Meaningful REIT Allocations
A new Morningstar Associates analysis, sponsored by Nareit, found that the optimal portfolio allocation to REITs ranges between 5% and 18%. - Tower REITs, Real Estate Housing the Digital Economy
This study, conducted by Timothy Riddiough, Professor of Real Estate and Urban Land Economics at the University of Wisconsin – Madison, describes the tower business model in the United States and the important role of REITs, reviews and evaluates qualitative and quantitative evidence in addressing the question of whether towers are real estate, and considers the competitive environment in which tower REITs operate. - REITs Outperform Private Equity Real Estate Funds
New research by a team of academic researchers and practitioners compares private equity real estate (PERE) fund performance with REITs over matched investment horizons. The study, Private Equity Real Estate Fund Performance: A Comparison to Listed REITs and Open-end Core Funds, uses a unique data set comprising 375 U.S. and 255 international PERE closed end funds with vintages from 2000 to 2014. The study analyzes whether investors in each of the PERE funds would have enjoyed higher return by investing in REITs. REITs outperformed PERE funds by a wide margin. - Economic Contribution of REITs in the United States
Nareit commissioned EY to estimate the current economic contribution of all U.S. REITs (including public listed, public non-listed, and private REITs) in the United States. The total economic contribution of U.S. REITs in 2018, the most recent year of complete information, was an estimated 2.4 million full-time equivalent (FTE) jobs and $148.2 billion of labor income. The total economic contribution, or "footprint," of REITs consists of the direct operations of REITs and related businesses in the United States, as well as the impacts from dividend and interest payments by REITs and REIT property improvement and construction investments. - Wilshire Study Shows REITs Boost Returns in Target Date Funds
Wilshire Funds Management studied the role of REITs in Target Date Funds and found they are critical to improving investment returns and reducing risk in these funds. It is expected that the majority of new 401(k) and IRA assets will be invested in Target Date Funds over the coming decades and the retirement security of millions of Americans will depend upon their investment performance. - Wilshire Income-Oriented Retirement Planning Study
New research from Wilshire Funds Management, sponsored by NAREIT and based on 40 years of investment return data, showed that adding a range of high income-generating assets (including REITs) to a traditional retirement-stage portfolio could boost income returns by nearly 40 percent, while providing comparable total returns and no increase in risk. Wilshire’s research is based on a variation of the Mean-Variance Optimization (MVO) method for portfolio modelling called Income Oriented Mean Variance Optimization (IOMVO). Wilshire found that a traditional MVO-modelled portfolio that delivered a 2.37 percent annual income return and a 5.37 percent annual total return with an 8 percent level of portfolio risk could be enhanced with IOMVO modelling to deliver a greater annual income return of 3.25 percent and a comparable 5.27 percent annual total return with the same 8 percent level of risk.
- MSA Geographic Allocations, Property Selection, and Performance Attribution in Public and Private Real Estate Market Returns
by David C. Ling (University of Florida), Andy Naranjo (University of Florida), and Benjamin Scheick (Villanova University)
Noting previous research indicating that total returns from stock exchange-traded equity REITs have outpaced those produced by institutional and private-equity real estate investors after controlling for differences in leverage and in property-type mix, the authors ask whether the "REIT premium" might arise from differences in the allocation of capital across metropolitan areas. Comparing data from REITs and from the National Council of Real Estate Investment Fiduciaries (NCREIF), they indeed find significant differences in geographic allocation. They also find, however, that differences in metro-area selection account for only a small share of outperformance by REITs, with selection of individual properties within each metro area playing a much more important role.
- Download the levered and unlevered Equity REIT return data used in this report.
- Academic Research: REITs Outperformed Private Real Estate Over 1994-2012
This research, sponsored by NAREIT and conducted by two University of Florida economists, finds that exchange-traded equity REITs provided returns 0.49% greater per year, on average, compared to equivalent non-REIT real estate investments. The research also finds that REIT returns predicted private real estate returns by reacting more quickly to market conditions, thereby serving as “a fundamental information transmission channel.”