The State Of REITs: February 2025 Edition

REIT Performance Overview - REITs experienced a modestly negative average total return of -1.29% in January 2025, underperforming compared to broader market indices such as the Dow Jones Industrial Average (+4.8%), S&P 500 (+2.8%), and NASDAQ (+1.7%) [1] - The Vanguard Real Estate ETF (VNQ) outperformed the average REIT with a return of +1.65% [1] - The spread between the 2025 FFO multiples of large cap REITs (17.3x) and small cap REITs (12.6x) widened, indicating that investors are paying 37.3% more for each dollar of FFO from large cap REITs compared to small cap REITs [1] Property Type Performance - 38.9% of REIT property types yielded positive total returns in January, with a 15.14% spread between the best (Timber +7.63%, Industrial +4.06%) and worst performing property types (Single Family Housing -7.51%, Shopping Center -6.46%) [3][4] - The average P/FFO for the REIT sector decreased from 13.8x to 13.6x in January, with 50% of property types experiencing multiple contraction [4] Individual Security Highlights - Medical Properties Trust (MPW) outperformed all equity REITs with a return of +18.73%, following significant events including the bankruptcy of its tenant Prospect Medical Holdings and refinancing of large loans [6] - Creative Media & Community Trust (CMCT) saw a drastic decline of -66.22% due to a reverse stock split and subsequent price collapse [7] Dividend Yield Insights - High dividend yields remain a key attraction for investors in the REIT sector, with many REITs trading below their NAV, leading to attractive yield opportunities [11] - The highest dividend yield as of January 31, 2025, was Global Net Lease, Inc. at 15.3%, followed by Brandywine Realty Trust at 10.9% and Global Medical REIT Inc. at 10.7% [13]