REITs notched banner year in 2021, but 2022 could be rocky

Trusts unlikely to see same success after recent rebound: report

National /
Dec.December 28, 2021 12:45 PM

REITs notched banner year in 2021, but 2022 could be rocky (iStock, Illustration by Kevin Cifuentes for The Real Deal)

Real estate investment trusts are coming off one their biggest years in decades, but 2022 might not have a repeat performance in store for the sector.

The FTSE NAREIT Equity REITs index was up 36 percent this year through Dec. 23, per data from real estate analytics firm Green Street reported by The Wall Street Journal. Those figures mark 10 percentage points greater than the gains made by the S&P 500 during 2021.

In terms of absolute performance, the REIT index is on pace for its best year since 1976. However, some trusts fared better than others.

Total returns of industrial REITs have exceeded 40 percent since the start of the pandemic, according to the Journal. Total returns for self-storage landlords have been even greater, reaching more than 80 percent. On the other hand, properties like office buildings, malls and hotels have struggled as those industries suffered through lockdown orders.

Analysts surveyed by the Journal pumped the brakes on predictions for an equally strong 2022 for REITs.

Green Street reported some of the gains this year were a result of a rebound from 2020. Considering the year was a recovery from unprecedented circumstances, sustaining the sector’s momentum into another year could be challenging.

REITs are facing the same looming obstacles as the rest of the real estate industry, including the Omicron coronavirus variant and rising inflation.

“Headline risk around additional variants, inflation and interest rates will create significant volatility over the next 12 months,” said an Evercore ISI report on REITs, according to the Journal.

Much of the REIT picture will be painted by the progress in confronting the pandemic next year.

Surges in new coronavirus cases and the spread of new strains could create issues for REITs invested in offices and senior housing, the Journal noted. Success in curbing new waves of the pandemic, however, could buoy the travel industry and spur a rebound for malls and hotels.

[WSJ] — Holden Walter-Warner





    Related Articles

    arrow_forward_ios
    Competition for Rentals Heats Up in Manhattan, Brooklyn, Queens
    Is Airbnb playing a role in NYC’s skyrocketing rents?
    Is Airbnb playing a role in NYC’s skyrocketing rents?
    A Smurf house? (Caldwell Banker)
    Smurf-erriffic! Michigan home seems to be inspired by cartoon
    Smurf-erriffic! Michigan home seems to be inspired by cartoon
    The home where Christopher Watts killed his pregnant wife is on the market. (Getty)
    Colorado home where infamous murder took place quietly listed
    Colorado home where infamous murder took place quietly listed
    L-R: Savanna's Chris Schlank, Eastdil Secured's Will Silverman, JLL's Bob Knakal (Photos by Paul Dilakian)
    Office royalty talk conversions, distress and the “downsize upgrade” trend
    Office royalty talk conversions, distress and the “downsize upgrade” trend
    From left: Amy Schumer and 190 Riverside Drive; Jimmy Fallon and 34 Gramercy Park East (Getty Images, Beyond My Ken, CC BY-SA 4.0 - via Wikimedia Commons, iStock)
    Jimmy Fallon, Amy Schumer selling Manhattan pads
    Jimmy Fallon, Amy Schumer selling Manhattan pads
    OKO's Vladislav Doronin and the Crown Building ( OKO Group, Aman)
    Crown Building notches another peak sale with $55M condo
    Crown Building notches another peak sale with $55M condo
    Columbia Property Trust's Nelson Mills and 799 Broadway (Columbia Property Trust, 799 Broadway, iStock)
    Columbia Property Trust signs investment firm to 71K sf at 799 Broadway
    Columbia Property Trust signs investment firm to 71K sf at 799 Broadway
    East End Capital's Jonathon Yormak and 141 East Houston Street (141 East Houston Street, East End Capital)
    Boutique LES office scores blockchain firm as anchor tenant
    Boutique LES office scores blockchain firm as anchor tenant
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...