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REIT Total Returns by Sector in 2009
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Despite significant gains for the second
quarter of 2009, as REITs rallied in April and May, 2009, REIT returns
have still not turned positive after
severe price drops that began in 2008, resulting in an average total return
for the REIT Index of (1%)
for the first six months of 2009. Financial Mortgage (total return of 26%)
and Hotel (total return of 16%) are the only REIT sectors with positive
total returns for the first six months of 2009.
Financial Commercial REITs posted
flat total return, as remaining sectors posted total return declines in
a range of (2%)
for Specialty REITs to (12%)
for Office REITs.
As REITs reduced leverage through stock offerings, investors' regained
confidence and renewed interest
caused REIT stock prices to soar 36% during the second quarter of 2009,
outperforming the 15% rally for the S&P 500 Index. A 2% dividend contribution
resulted in an average total return for the REIT Index of 38%. All REIT
sectors saw total returns rebound into positive territory. Beaten down
Hotel REITs (total return of 68%) and Retail REITs (total return of 55%)
saw greatest improvement during the second quarter of 2009.
REIT stock prices declined (23%)
during the first quarter of 2009, underperforming the (12%)
price decline for the S&P 500. A
4% dividend contribution helped offset the price decline, resulting in
an average total return for the REIT Index of (18%).
Although REIT returns suffered further declines during the first quarter
of 2009, performance was much improved compared to the fourth quarter of
2008. Financial Mortgage REITs (up 40% as upward movement in several stocks
trading below $1 added to large price change increases) was the only REIT
sector to post a positive total return in the first quarter of 2009. The
remaining sectors posted total return declines in a range of (10%)
for Financial Commercial REITs to (36%)
for Retail REITs.
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