JPRE - The State Of REITs: June 2024 Edition
2024-06-21 07:27:49 ET
Summary
- After a rough start to the year, REITs partially bounced back in May with a +2.51% average total return.
- Small-cap REITs (-0.48%) averaged a negative return in May, but micro caps (+5.09%), large caps (+4.28%) and mid caps (+3.35%) were solidly in the black.
- 74.03% of REIT securities had a positive total return in May.
- 14 out of 18 REIT property types averaged a positive total return in May. Self-Storage (+8.2%) led the REIT sector while Advertising REITs (-3.47%) underperformed.
- The average REIT NAV discount narrowed from -20.02% to -17.50% during May. The median NAV discount narrowed from -19.77% to-17.08%.
REIT Performance
Equity REITs partially recovered from a poor performance in April with a +2.51% total return in May. REITs lagged the broader market as they were outpaced by the Dow Jones Industrial Average (+2.6%), S&P 500 (+5.0%) and NASDAQ (+7.0%). The market cap weighted Vanguard Real Estate ETF ( VNQ ) outpaced the average REIT in May (+4.56% vs. +2.51%) and has narrowly outperformed year-to-date (-4.98% vs. -5.45%). The spread between the 2024 FFO multiples of large cap REITs (16.6x) and small cap REITs (12.4x) narrowed in May as multiples expanded 0.8 turns for large caps and 0.2 turns for small caps. Investors currently need to pay an average of 33.9% more for each dollar of FFO from large cap REITs relative to small cap REITs. In this monthly publication, I will provide REIT data on numerous metrics to help readers identify which property types and individual securities currently offer the best opportunities to achieve their investment goals.
Source: Graph by Simon Bowler of 2nd Market Capital, Data compiled from S&P Global Market Intelligence LLC. See important notes and disclosures at the end of this article
