The State Of REITs: February 2026 Edition

Core Insights - The REIT sector started 2026 with an average total return of +1.09% in January, underperforming the S&P 500 (+1.4%) and Dow Jones Industrial Average (+1.8%), but outperforming the NASDAQ (+1.0%) [1] - Large-cap REITs saw a widening spread in FFO multiples compared to small-cap REITs, with large caps at 16.4x and small caps at 12.8x, indicating a 28.1% premium for large-cap REITs [1] - 63.46% of REITs achieved a positive total return in January, marking a significant improvement from the previous year's -1.29% return [9] REIT Performance - REITs averaged a total return of +1.09% in January 2026, with large caps (+2.35%) trailing small caps (+3.27%) and mid caps (+2.65%) [3] - The Vanguard Real Estate Index Fund ETF (VNQ) outperformed the average REIT with a return of +2.61% [1] - The average P/FFO for the REIT sector increased from 13.4x to 13.6x during January, with 72.2% of property types experiencing multiple expansion [4] Property Type Performance - Two-thirds of REIT property types had positive returns in January, with a notable spread of 23.59% between the best (Land +15.36%) and worst (Single Family Housing -8.24%) performing types [4] - Data Centers (+8.49%) and Land (+15.36%) were the top performers, while Office (-7.24%) and Single Family Housing (-8.24%) lagged [4][5] Individual Securities - City Office REIT, Inc. was taken private at $7.00/share, while Plymouth Industrial REIT, Inc. was acquired at $22.00/share [7][8] - Gladstone Land Corporation (+22.45%) and Farmland Partners Inc. (+20.56%) led the sector in January [8] - Office Properties Income Trust (OPITQ) saw a drastic decline of -96.09% following a Chapter 11 bankruptcy filing [9] Dividend Yield Insights - High dividend yields remain a key attraction for investors in the REIT sector, with many REITs trading below their NAV [13] - Innovative Industrial Properties, Inc. leads with a dividend yield of 15.7%, followed by NewLake Capital Partners at 11.4% [15]