The State Of REITs: May 2025 Edition

2025-05-23 14:25:25 ET

Summary

• The REIT sector saw another month of red in April (-6.45%) and REITs now average a -9.10% return over the first 4 months of the year.
• Microcap (-8.87%) and small-cap REITs (-8.69%) endured bigger average losses than mid-caps (-5.45%) and large-caps (-2.93%).
• 84.62% of REIT securities had a negative total return in April.
• 83% of REIT property types averaged negative total returns in April. Timber (-12.90%) and Mall REITs (-10.52%) averaged the biggest declines, while Data Center (+7.28%) and Infrastructure REITs (+2.47%) finished.
• The average REIT NAV discount widened from-14.81% to -18.93% during April. The median NAV discount also widened from-17.43% to -22.07%.

REIT Performance

REITs fell further into the red in 2025 during a tough April selloff, with a -6.45% average total return. The REIT sector badly underperformed the broader market, falling far short of the Dow Jones Industrial Average (-3.1%), S&P 500 (-0.7%) and NASDAQ (+0.9%). The market cap weighted Vanguard Real Estate ETF ( VNQ ) handily outpaced the average REIT again in April (-2.44% vs. -6.45%) and has massively outperformed year-to-date (+0.19% vs. -9.10%). The spread between the 2025 FFO multiples of large-cap REITs (17.5x) and small cap REITs (12.9x) narrowed in March as multiples contracted 0.6 turns for large caps but held steady for small caps. Investors currently need to pay an average of 35.7% 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....

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