Market Commentary Blog

Diversified REITs saw FFO swing from negative $102 million in the second quarter to positive $962 million in Q3.

The FTSE Nareit All Equity REITs index posted a total return of 6.9% last week, after a 4.3% gain the week before.

REITs outperformed the broader markets by a wide margin, especially those property sectors that had been most impacted by the shutdowns and social distancing measures.

The pandemic had a significant impact on demand for commercial real estate in the third quarter, resulting in rising vacancy rates and slowing or falling rents and property prices. The impact was uneven across property types, however, with greater effects on office and retail property markets, but smaller or little impact on multifamily and industrial properties.

While REITs have underperformed the broader stock market so far in 2020, it is long-term returns that matter.  REITs have been a favorable choice when looking at long-term returns.

REITs posted declines comparable to those on broad market indices.

The travel industry has been severely impacted by the pandemic, including the lodging/resort REIT sector, but measures to reduce risks of infection have allowed hotels to continue reopening, and occupancy has begun to rise in recent months.

Roughly 44% of American households are invested in REIT stocks.

Across the various REIT sectors, there were seven property sectors with gains for the week, led by lodging/resorts with a total return of 7.6%.

Demand for apartments looks to be robust post-pandemic, however, as there is one feature of housing that makes it different from retail, office, or hotels: one cannot live and sleep online.

Last week’s decline breaks a string of gains the to prior weeks, but REITs are still up 2.1% month-to-date.