REITs Outperform S&P 500 Again

January 2, 2003 ( - The SNL Equity REIT Index again outperformed the S&P 500 in 2002, posting a total return of 4.0%, compared with a 22% decline for the S&P 500, according to data from SNL Financial.

Positive performance of the Index is attributed to strong dividend payments.   On a price-only basis, the Index is down 2.8% for the year, compared to the S&P 500’s decline of 23.4% on the same measure, according to data from SNL, a provider of information on the nation’s real estate investment trust industry..

This is the third year in a row that REITs have outperformed the S&P 500, posting gains of 13.8% in 2001 and 25.9% in 2000, compared to the S&P 500’s returns of -11.9% and -9.1% during the same period, according to Paul Reeder, Director of Real Estate at SNL Financial.

Categorical Performance

Individual category performance was split down in the middle in 2002, with five categories showing a gain and an equal amount recording a loss. Among the gainers this year:

  • Retail (21.1%)
  • Industrial (16.9%)
  • Health Care (7.1%)
  • Diversified (4.2%)
  • Self Storage (0.6%)

SNL said strong consumer confidence through the fall attributed to increase in Retail and Industrial REITS, as the retail tenant base geared up for the holiday season and searched for warehouse and distribution facilities for storage throughout their supply chains. However, the firm cautions that recent consumer confidence data could affect these companies going into 2003.

The other end of the spectrum saw losses in the following categories:

  • Multifamily (-5.8%)
  • Specialty (-4.7%)
  • Office (-4.2%)
  • Manufacturing (-4.1%)
  • Hotel (-1.4%)

SNL attributes the decline in Multifamily REITs to competition in the single-family home market that continued to erode their tenant base.