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Debt & Equity

Real estate ‘up cycle’ boosts REITs to second quarter rebound

Real Estate Investment Trusts’ operating performance rebounded sharply in the second quarter from the first quarter of 2015, according to the Total REIT Industry Tracker Series (NAREIT T-Tracker) released by the National Association of Real Estate Investment Trusts (NAREIT).

The NAREIT T-Tracker is a quarterly, composite performance measure of the entire U.S. stock exchange-listed REIT industry.

“REITs are benefiting from the longer-term commercial real estate up cycle and from near-term strengthening of the U.S. economy this spring,” said NAREIT president and CEO Steven A. Wechsler.

“The economy has regained momentum with healthy demand growth following a sluggish winter.”

NAREIT T-Tracker results for the second quarter ended June 30, 2015 were as follows:

  • The U.S. listed Equity REIT industry produced total Funds From Operations (FFO) of $12.9 billion in 2015:Q2, up 16.6 percent compared to the first quarter of 2015 and a 16.5 percent increase from $11.1 billion in the second quarter of 2014.
  • Second quarter 2015 FFO per share was up 14.8 percent from the first quarter of 2015, and up 5.0 percent compared to the same period last year.
  • Total Net Operating Income (NOI) was $19.5 billion in the second quarter for U.S. listed Equity REITs, up 7.5 percent from the first quarter of 2015 and a 12.7 percent increase from $17.3 billion in the second quarter of 2014.
  • The NAREIT T-Tracker began compiling same-store NOI this quarter to provide a key measure of organic growth for investors. REITs delivered a 3.9 percent increase in same-store NOI in 2015:Q2 compared to the same period a year ago.
  • Total dividends paid by all listed REITs were $10.7 billion in the second quarter, up 2.1 percent from $10.5 billion in the same period last year.

“REITs delivered strong operating performance in absolute terms and outperformed other S&P 500 sectors in the second quarter by a wide margin,” said Calvin Schnure, NAREIT’s Senior Vice President of Research & Economic Analysis.

“The growth in REIT net operating income is being driven by healthy same-store trends, reflecting rising occupancy and rent growth, coupled with ongoing expansion of the REIT sector.”

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