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REIT Total Returns by Sector in 2008
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2008 REIT performance was impacted by
the worst economic decline since World War II. Financial/Commercial (up
23% due to significant price declines resulting in extremely high yields
based on dividends paid in 2008) was the only REIT sector to post a positive
total return in 2008. The remaining sectors posted total returns in a range
of (12%)
for Health Care to (41%)
for Hotel, resulting in an average total return for the REIT Index of (22%).
REIT prices declined (46%)
in 2008, underperforming the (38%)
price decline for the S&P 500.
Significant declines in all sectors during the fourth quarter of 2008 resulted
in an average total return for the REIT Index of (40.0%).
REIT prices declined (41%)
in the fourth quarter of 2008, worse than the (23%)
price decline for the S&P 500. A 3% dividend contribution did little
to offset the REIT price declines. Financial/Mortgage and Health Care were
the best performing REIT sectors during the fourth quarter of 2008, each
declining (28%).
Financial/Commercial and Hotel were the worst performing sectors, each
declining more than (55%).
REIT returns improved during the third quarter of 2008. All sector returns,
excluding Financial/Commercial and Hotel, turned positive. Financial/Mortgage
sector had the biggest turnaround from the previous quarter, aided by renewed
investment in Thornburg Mortgage. Average total return for the REIT Index
of 6.0%, consisting of a 4% price increase and a 2% dividend contribution
(including special dividends paid during the quarter), improved dramatically
from a loss of (7.3%)
for the second quarter of 2008.
REITs trended downward during the second quarter of 2008, erasing improvements
seen during the previous quarter. Residential, Specialty, and Health Care
sector returns turned into negative territory, resulting in no sectors
posting a positive return during the second quarter of 2008. Average total
return for the REIT Index of (7.3%),
consisting of a (9%)
price decline offset by a 2% dividend contribution (including special dividends
paid during the quarter), declined from a loss of (2.4%)
for the first quarter of 2008.
REITs had regained traction from a disappointing end to 2007. REIT returns
rebounded in all sectors except Financial/Commercial during the first quarter
of 2008. Residential and Specialty sector returns turned positive while
Health Care sector returns improved from a slight gain during the fourth
quarter of 2007. Average total return for the REIT Index of (2.4%),
consisting of a (4%)
price decline offset by a 2% dividend contribution (including special dividends
paid during the quarter), improved dramatically from (13.7%)
for the fourth quarter of 2007.
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