08/15/2017

NAREIT T-Tracker Reports Quarterly Total Industry FFO Exceeded $15 Billion, Up 50 Percent Over the Past Three Years  

WASHINGTON, DC, August 15, 2017 – U.S. stock exchange-listed Equity REITs delivered record Funds From Operations (FFO) of $15.6 billion in the second quarter of 2017, according to the NAREIT T-Tracker®, a quarterly composite performance measure of the entire U.S. listed REIT industry. This year’s second quarter was the first in which REIT industry FFO exceeded $15 billion, and followed just three years after the REIT industry first broke the $10 billion mark in the second quarter of 2014.

“This quarter’s T-Tracker results show a healthy REIT industry, with near-record occupancy rates,” said NAREIT President and CEO Steven A. Wechsler. “The growth in REIT FFO was driven by a combination of new REITs entering the market, asset acquisitions, and organic growth of properties held by existing REITs.”

The NAREIT T-Tracker showed the second quarter’s FFO performance was an increase of 7.9 percent over the first quarter of 2017 and a gain of 7.3 percent over the second quarter of 2016.

Occupancy rates for all Equity REITs were unchanged at 93.4 percent, just below the record high occupancy rate of 93.7 percent reached in the third and fourth quarters of 2016.

Second quarter 2017 Same Store Net Operating Income (SS NOI) for the industry was up 3.3 percent, approximately the same as the 3.7 percent growth rate of the first quarter. SS NOI measures NOI generated by properties held for one year or more to factor out the effects of property acquisitions and dispositions.

Property sectors that posted substantial increases in FFO on both a quarterly change and year-ago basis, as well as growth of SS NOI, include:

  • Industrial—Second quarter FFO was up 13.9 percent over the prior quarter and 20.9 percent over the second quarter a year ago; SS NOI increased 4.8 percent from one year earlier;
  • Diversified—Second quarter FFO rose 12.2 percent over the prior quarter and 21.3 percent over 2016’s second quarter; SS NOI was up 4.5 percent from one year earlier;
  • Data Centers—Second quarter FFO increased 7.0 percent from the first quarter of 2017 and 12.4 percent over 2016’s second quarter, while SS NOI rose 5.8 percent;
  • Infrastructure—Second quarter FFO edged up 2.0 percent over the prior quarter, but was 38.6 percent higher than one year ago;

Other highlights from the second quarter 2017 NAREIT T-Tracker results were:

  • Retail REITs recorded a 7.5 percent increase in FFO over the prior quarter, and SS NOI was up 2.3 percent over one year ago. Occupancy rates for the Retail property sector remained stable at 95.2 percent and were above the overall Equity REIT industry average.
  • Dividends paid by Equity and Mortgage REITs totaled $12.8 billion, a decrease of 4.2 percent from the first quarter of 2017 and a 6.3 percent gain from the second quarter of 2016.
  • Total industry Net Operating Income (NOI) was $23.6 billion, up 4.8 percent from the first quarter of 2017 and 8.8 percent higher than in the second quarter of 2016.

“High occupancy rates and demand for commercial space drove earnings higher for the REIT industry,” said Calvin Schnure, NAREIT’s SVP of Research & Economic Analysis. “Retail REITs have been able to sustain occupancy levels by attracting new and more productive tenants to replace those that have left. Retail REITs have paid $9.4 billion in dividends to shareholders over the past four quarters.”

About the NAREIT T-Tracker

The NAREIT Total REIT Industry Tracker Series provides investors with the total quarterly operating performance of the U.S. listed Equity REIT industry, as well as the total dividend performance of Equity and Mortgage REITs. The series includes the NAREIT FFO Tracker, the NAREIT NOI Tracker and the NAREIT Dividend Tracker, along with other metrics.

The NAREIT FFO Tracker measures reported funds from operations (FFO) for REITs in the FTSE NAREIT All Equity REITs Index.  FFO is a non-GAAP measure that is roughly equal to a REIT's GAAP net income excluding real estate depreciation and gains or losses from sales of property. REITs generally adhere to the NAREIT definition of FFO in their SEC filings.

The NAREIT NOI Tracker measures reported net operating income (NOI) for REITs in the FTSE NAREIT All Equity REITs Index.  NOI is a non-GAAP measure that equals gross operating income provided by the property (rental income as well as fees and other revenues) less property operating expenses, including utilities, management fees, insurance, and property taxes, but excluding interest and principal payments on debt, income or franchise taxes, capital expenditures and depreciation.

The NAREIT Dividend Tracker monitors total reported common dividends paid by REITs in the FTSE NAREIT All Equity REITs Index and the FTSE NAREIT Mortgage REITs Index.

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