The Market Commentary blog on reit.com presents analysis of the macro- and micro-economic fundamentals impacting the REIT and commercial real estate industry. The Nareit economics team offers their commentary on the state of the market, the outlook for commercial real estate and breaking macroeconomic news. The opinions set forth here are solely those of its author(s), and do not necessarily reflect the views of the Nareit or its membership.
Nareit’s 2021 Mid-Year Economic Outlook Sees a Robust But Uneven Recovery
Despite the bumps in the road ahead, the issue of a strong recovery is no longer “if” but “when”.
REITs Rally for Third Straight Week
REITs are up more than 20% so far this year, as of June 4.
REITs Rose Last Week as all Sectors Increased
REITs rose last week, with a total return of 2.0% on the FTSE Nareit All Equity REITs Index
REITs During the Pandemic: Performance at the 15 Month Mark
As of May 21, which marks 15 months since the market peak prior to the pandemic, REIT total returns have fully recovered from the initial losses in early 2020.
REIT Exposures to Interest Rates are at an All-Time Low
REITs have reduced their reliance on borrowings, which lowered leverage ratios considerably over the past decade.
REIT Shares Advanced Last Week
The increases came even as broader markets edged slightly lower, as seen in the negative 0.3% return on the Russell 1000.
REIT Earnings Recovery Continued in First Quarter: Nareit T-Tracker
The recovery in REIT earnings from declines early in the pandemic continued in the first quarter of 2021, according to data recently released in the Nareit T-Tracker®.
Use of REITs in Target-date Funds Growing
The growing use of target-date funds (TDFs) remains the dominant investment-related trend in the defined contribution and individual retirement account markets, and REITs continued to be a critical component of TDFs in 2020.
REIT Shares Declined Again Last Week
Residential REITs edged up 0.1%, but all other property sectors were in the red.
How REITs Provide Protection Against Inflation
Real estate rents and values tend to increase when prices do, due in part to the fact that many leases are tied to inflation. This supports REIT dividend growth and provides a reliable stream of income even during inflationary periods.
Does the Interest Rate Environment Remain Favorable for Real Estate?
The two biggest factors for the outlook for long-term interest rates (which have the most direct impact on commercial real estate markets) are economic growth and the likelihood that such growth will lift inflation higher.
REIT Capital Market Activity in 2021
April and early May capital markets activity was highlighted by the announcement of three large REIT mergers. So far in 2021, U.S. REITs have raised over $26 billion in IPOs and secondary debt and equity offerings.