The State Of REITs: May 2024 Edition

REIT Performance Overview - April was a challenging month for the stock market, with equity REITs averaging a total return of -4.27%, slightly outperforming the Dow Jones Industrial Average (-4.9%) and NASDAQ (-4.4%), but underperforming the S&P 500 (-4.1%) [2] - The Vanguard Real Estate ETF (VNQ) experienced a decline of -7.94% in April and has underperformed year-to-date with a return of -9.12% [2] - The spread between the 2024 FFO multiples of large cap REITs (15.8x) and small cap REITs (12.2x) narrowed, with investors currently paying an average of 29.5% more for large cap REITs [2][24] Performance by Market Capitalization - Micro cap (-2.71%) and small cap REITs (-2.87%) outperformed large caps (-5.99%) and mid-caps (-5.36%) in April [6] - Small caps have outperformed large caps by 64 basis points through the first third of 2024 [6] Property Type Performance - Only 17% of REIT property types averaged a positive total return in April, with a 17.6% total return spread between the best (Multifamily +3.73%) and worst (Timber -13.89%) performing property types [7] - Multifamily REITs were led by Apartment Income REIT (AIRC) which saw a return of +18.20% following acquisition news by Blackstone [7] - Timber REITs faced significant declines, with Weyerhaeuser (WY) dropping -15.98% [7] Year-to-Date Performance - Year-to-date, Infrastructure (-31.08%) and Land (-15.23%) have shown the worst performance among property types, while Advertising (+13.10%) and Single Family Housing (+7.21%) are among the few in positive territory [9] - The average REIT has a year-to-date return of -7.65% [9] Valuation Metrics - The average P/FFO for the REIT sector decreased from 13.4x to 12.8x in April, with 88.9% of property types experiencing multiple contraction [9] - Land (28.3x) and Data Centers (23.5x) currently trade at the highest average multiples among REIT property types [9] Individual Securities Performance - Pennsylvania REIT (OTC:PRETQ) had a total return of +19.57% for 2024 despite being delisted [12] - CorEnergy Infrastructure Trust (OTCPK:CORRQ) saw a significant increase of +98.02% in April, but remains down -94.29% year-to-date [12] - Only 21.29% of REITs had a positive total return in April, mirroring the overall sector's performance [12] Dividend Yield Insights - High dividend yields are a key attraction for investors in the REIT sector, with many REITs trading below their NAV, leading to attractive yields [15] - A table ranking equity REITs by dividend yield shows Global Net Lease, Inc. at the top with a yield of 20.4% [16] Monthly Dividend Payers - A list of monthly dividend-paying REITs includes Gladstone Commercial Corporation (9.0%) and EPR Properties (8.4%) [21] Bankruptcy Trends - Bankruptcy filings increased by 34.7% in April 2023 compared to the previous month, indicating ongoing challenges in the sector [26]