REIT Industry Shows Growth in Acquisitions

September 12, 2019 | Alternative Investments

The National Association for Real Estate Investment Trusts (Nareit) has released its report of the performance of the REIT industry in the second quarter of 2019.

The association found that Funds from Operations (FFO) totaled $16.5 billion, a 2.8% increase from the first quarter of 2019 while Net operating income totaled $24.8 billion, 2.4% higher from last quarter. Total dividends paid by equity and mortgage REITs totaled $15.0 billion in the quarter. The top-performing equity REIT property segments on a same-store Net Operating Income basis over the past four quarters were manufactured homes, single-family homes, office, and industrial.

National Association for Real Estate Investment Trusts Survey

After five months of being near neutral REIT acquisitions rose in the quarter with $12.5 billion of new acquisitions. Nareit Vice President of Research Nicole Funari noted that “REITs’ acquisitions are up this quarter, without increasing the industry‘s very favorable leverage position, which is at historic lows.”  Den to total market value in the industry right now is just 32.5%

The amount of interest being paid by US REITS also continues to decline as REITs can find financing on very favorable terms in today’s low rate world.

Occupancy rates for equity REITs remained above the 90% level again this quarter as the economy remains stable compared to past years. Only mall REITs are struggling with lower occupancy rates, and even there for Class A malls, the situation appears to be leveling out.

Equity REITs returned 1.8% in the 2nd quarter while mortgage REITs had a modest negative total return of (-0.2%). Industrial Properties had the highest total return at 9%, and Retail properties had the worst performance at (-6.8%).

 

 

 

 

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