REITs underperform broader equity index in July

U.S. equity REITs underperformed the broader equity index in July, as the NAREIT All Equity REIT Index returned 0.83 percent in the past month — considerably lower than the S&P 500 Index’s 5.09 percent return over the same period.

Joe Rodriguez, head of global real estate securities at Invesco Real Estate, says returns in July were in line with the broader market until the REITs’ earnings began to be reported. He says that, while the results reflected healthy property fundamentals, investors were disappointed by the results, and many reduced their investments in REITs.

“However, it bears mentioning that tenant demand is tied to economic activity, and continued expansion of economic activity and job creation can positively influence property fundamentals, which would further support future REIT earnings growth and current stock valuations,” Rodriguez says