Industry Study Shows REITs Outperform

May 14, 2002 ( - Real Estate Investment Trusts (REITs) have generated a compound annual return over the last 30 years that edges out the performance of broader markets in equities and government bonds.

That was the result of a new study of REITs sponsored by The National Association of Real Estate Investment Trusts (NAREIT). REITs returned 12.5 % from 1972 to 2001, compared with 8.9% for bonds, 12.2% for the S&P 500 and 14.9% for Ibbotson’s Small Stock Index, the NAREIT report said.

Based on an analysis of 2001 performance data, Ibbotson said REITs increased compound annual returns between 1992 and 2001 by up to 1.3%. NAREIT commissioned Ibbotson, an investment research company, to update its performance data.

As part of the NAREIT-sponsored study, Ibbotson analyzed the return by 2001 of $10,000 invested in three portfolios with similar risk characteristics in 1992. According to Ibbotson:

  • a non-REIT portfolio would grow to $25,940,
  • a portfolio with a 10% REIT asset allocation would jump 7.5% to $27,890, and
  • a portfolio with a 20% REIT allocation would skyrocket 12.5% to $29, 170

NAREIT is the national trade association for REITs and publicly-traded real estate companies.

For more information, see the NAREIT Web site .