In this environment of rising interest rates (which started in Q4 2014), we explore the performance of REITs relative to the S&P 500. To illustrate the industry’s performance in this environment Economatica chose the Top 25 REITs ranked by Total Assets and examined several key metrics.
As can be observed from the 5-year table below the median returns for this group relative to the S&P 500 have ranged from negative 3.76% in the 1-year return to positive 6.77% in the 5-year return.
On an individual basis there are a handful of companies which have performed well despite the pressures of interest rates and other factors. The companies with the highest YTD returns relative to the S&P 500 are HCP (15.05%), Welltower (13.83%), and Realty Income Corp (12.65%). More important are those companies which have outperformed the market since interest rates began to move upwards four years ago.
Taking first place is New Residential Investment with a 4 year cumulative return relative to the S&P 500 of 69.64%. Equinix takes second place with a return of 47.94% and Digital Realty Trust places third with 43.43%.
Dividend Yield and Dividend Paid per Share have remained stable and consistent throughout this period.
The indicators Return on Assets (ROA) and EBIT/Net Interest Expense, two key evaluation metrics for REITs, have shown slight improvement during this period.
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