Equity REITs Edge Out S&P In First Half

July 1, 2003 (PLANSPONSOR.com) - Equity REITs bested the S&P 500 during the first two quarters of 2003 with a 14.4% return, compared to the S&P's 11.8% first-half performance, according to a report.

During the April to June period, however, equity REITs slightly lagged the broader equity index posting total returns of 13.1% versus the S&P’s 15.4%, according to a REIT performance report by SNL Financial.

Among the REIT sectors, according to SNL, manufactured housing REITs returned a total of 27.4%, the top performer of any property type. Health care REITs returned a total of 26.5%. The most dramatic story was the turnaround of hotel REITs in the second quarter, SNL said. Although the group posted a total return of -2.1% in the first half of the year, it turned in a very strong 19.7% for the second quarter.

Investors are returning to hotel REITs earlier than many analysts would have recommended, with most analysts predicting a turnaround in fundamentals in 2005 at the earliest, according to the report, which also noted that recent good economic news bodes well for the business travel market.

Among the other major property sectors, office and retail continued to post strong, though not record, quarterly total returns, at 13.3% and 11.6%, respectively. Multifamily and industrial REITs posted single-digit total returns of 9.9% and 8.5%, respectively, for the second quarter.