PSR - Why REIT's Didn't Grow In 2023
2024-05-23 07:12:11 ET
Summary
- REIT FFO/share growth in 2023 was stalled due to increased insurance premiums and property taxes.
- Property taxes jumped from $170B to almost $200B in 2023, while insurance costs doubled as a percentage of revenue.
- Higher insurance premiums reduced FFO margins by nearly 100 basis points, impacting FFO/share growth.
As a matter of standard practice, I like to periodically play devil's advocate with myself. Since I am presently bullish on REITs, I want to ensure that I put equal mental energy into the negative forces affecting REITs. There is already plenty of discussion about interest rates and how they impact cost of capital, so I see little point in rehashing that. Instead, I want to discuss the two lesser known forces which I believe stalled REIT FFO/share growth in 2023, insurance premiums and property taxes....
Why REIT's Didn't Grow In 2023