The FTSE Nareit All Equity REITs Index rose 3.2% in September, continuing to outperform the broader stock market as the Dow Jones U.S. Total Stock Market and Russell 1000 each rose 2.1%. The All Equity REITs Index rose 16.8% in the third quarter and is up 14.2% on a year-to-date basis. The Federal Reserve’s long-anticipated interest rate cut came in September, with rates lowered by 50 basis points. Further rate cuts are expected, with most investors predicting 25 to 50 basis points in cuts in November.
The yield on the 10-Year Treasury declined 13 basis points to end the month at 3.79%. The dividend yield on the FTSE Nareit All Equity REITs index was 3.58% and the FTSE Nareit Mortgage REITs Index yielded 11.36%, compared to 1.22% for the S&P 500.
As shown in the chart above, the All Equity REITs index is up 26% since April 30, while the 10-Year Treasury has declined 89 basis points. Since October 2023, when the 10-Year Treasury peaked at 4.98%, the All Equity REITs index has returned 39.1%.
Most property sectors were positive in September, with timberlands posting a total return of 9.5%, followed by data centers at 6.8%, and office at 6.7%. Residential lagged with a return of -0.8%, followed by industrial at -0.6%, and gaming at 0.7%. On a year-to-date basis, specialty leads total returns with 50.6%, followed by health care at 32.6%, and office at 22.3%.
The FTSE Nareit Mortgage REITs Index rose 1.2% in September and is up 6.8%, year-to-date. Home financing rose 1.3% for the month and commercial financing was up 1.1%. Year-to-date, home financing is up 13.5% and commercial financing is down 2.2%.