REITs were the best-performing equity category of the past decade, according to the National Association of Real Estate Investment Trusts.
Investors who put money into U.S. REITs at the beginning of 2000 earned appreciably higher returns on their REIT investments by the end of the decade than they realized from their investments in other equity benchmarks, the organization said.
An investor who put $10,000 into the FTSE NAREIT Equity REIT Index at the beginning of the decade finished it with $27,454 in their pocket, as the index rose an average of 10.63% a year. By comparison, investors who chose the S&P 500 Index, which fell an average of 95 basis points a year, finished by just $9,090; the Nasdaq Composite Index, down an average of 5.67% a year, $5,577; and the Russell 2000, up 3.51% a year, $14,127.
“The average annual total returns from U.S. REITs over the past decade were more than 10 times the total return of the S&P 500,” noted NAREIT EVP of Research and Investor Outreach Michael Grupe.
Grupe added that the FTSE NAREIT Equity REIT Index outperformed other equity benchmarks over the past 15, 20, 30 and 53 years. “Despite the turmoil of recent years, long-term investors who maintained their investments in REITs and publicly traded real estate were rewarded for their discipline,” he said.
Last year, the index rose 27.99%, and eliminating the declines through early March, the index soared an astounding 121.53%, with nearly every major property sector turning in positive returns for the year, led by lodging (up 67.19%), regional malls (up 62.99%), office REITs (up 35.55%), home finance mortgage REITs (up 28.19%) and industrials (up 12.17%).
“U.S. REITs have demonstrated the ability to access capital through a variety of sources,” noted NAREIT President and CEO Steven A. Wechsler. “The public equity markets have been extremely supportive of secondary equity offerings. Additionally, re-equitized REITs were able to access the unsecured debt markets on significantly more favorable terms in the second half of the year. Private REITs also have been very successful in raising new capital in the past year.”