Real Estate Investment Trusts Show Strong Performance Over Past Year

On average, US real estate investment trusts (REITs) provided double digit returns for the year ending June 30, 2010. In the US, REITs currently own approximately 10-15 percent …

On average, US real estate investment trusts (REITs) provided double digit returns for the year ending June 30, 2010. In the US, REITs currently own approximately 10-15 percent of all commercial real estate, and the funds have raised billions of dollars over the past twelve months. See the following article from HousingWire for more on this.

The US Real Estate Investment Trusts (REITs) raised $22bn in initial, debt and equity capital offerings in 2010, and as a whole the industry owns $500bn of commercial real estate assets, approximately 10% to 15% of total institutionally owned commercial real estate, according to a mid-year report by the National Association of REITs, NAREIT.

Leading segments of the REIT industry included apartment REITs, up 16.29%, lodging and resorts, up 10.76%, and self storage, up 9.48%.

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For the 12 months ending June 30, 2010, an FTSE/NAREIT index of all 148 US REITs showed a 10.23% compound annual total return. By comparison, the Standard & Poor’s (S&P) 500’s compound annual total return over the same period was negative 1.59%, NAREIT said.

“Through their skilled management teams, high-quality assets and strong dividends — which over longer periods have accounted for nearly two-thirds of total returns — REITs have consistently provided outstanding long-term performance for their investors,” NAREIT president and CEO Steven Wechsler said in a press statement.

Of the $22bn in raised equity, $9.8bn was raised in secondary equity common and preferred share offerings, $10.9bn was raised in secured or unsecured debt offerings and $1.3bn was raised in initial public offerings (IPOs). Six REITs completed IPOs so far in 2010.

REITs paid out $13.5bn in dividends in 2009, yields of approximately 4.92% for the all-REIT index, NAREIT said. Over the past 10 years, average daily dollar trading volume for REITs has grown from $390m in June 2000 to $1.6bn in June 2005. In June 2010, the average reached $4.2bn.

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