REITs delivered their first-quarter gains in spite of slightly negative returns in March. The FTSE NAREIT All Equity REITs Index was down 1.28% in the month, and the FTSE NAREIT All REITs Index was down 1.38%, while the S&P 500 was up 0.04%.
On a 12-month basis ended March 31, the total return of the FTSE NAREIT All Equity REITs Index was up 25.02 % and the FTSE NAREIT All REITs Index was up 24.34%, significantly outpacing the S&P 500’s 15.65% gain in the period.
The U.S. REIT industry’s gains in the first quarter came on top of near 28 % gains in both 2010 and 2009, years in which the S&P 500 gained approximately 15 percent and 26% respectively.
At the end of 1Q11, equity REITs were up 205% from their market cycle trough in March 2009, but still remained 18% below their peak in February 2007.
Public equity and debt markets provided REITs with a significant amount of fresh capital in 1Q11, according to the FTSE NAREIT index. REITs raised a combined $23.3 billion in 59 equity and debt offerings in the period. The amount raised put the industry on track to surpass the $47.5 billion in public equity and debt it raised in 2010, the second largest annual amount raised in the industry’s history after the $49 billion raised in the record year of 2006.
REITs have used this fresh capital to de-leverage, helping to reduce the industry’s debt ratio by more than one-third from its high of 66.3 % at the end of February 2009 to 39.8% at year-end 2010, near its historical average. This improved balance sheet has allowed REITS to become the commercial real estate industry’s most active acquirers of properties in the past year.
“Today, REITs are both financially and strategically well-positioned to continue their track record of building long-term value for their investors,” said NAREIT President and CEO Steven Wechsler.