Comparing Y-O-Y Impacts on FFO for Nontraded and Listed REITs

June 29, 2020 | James Sprow | Blue Vault

In an article by Ronamil Portes at S&P Global Market Intelligence, the year-over-year changes in FFO (funds from operations) for listed REIT sectors showed the expected steep drop for listed hotel REITs, with a median down 64.2% for the largest decline among all REIT sectors. As expected, regional mall REITs also had a steep Y-O-Y decline of 7.4%, followed by diversified REITs at -4.3% and shopping center REITS at -2.7%. All other listed REIT sectors saw increases in FFO for Q1 2020 vs. Q1 2019, with the greatest increase among the industrial REIT sector at +9.2%, followed by residential REITs (+7.4%) and self-storage REITs (+6.9%).

For the nontraded REITs, Blue Vault compared Q1 2020 FFO to the Q1 2019 FFO totals and identified REITs with the largest dollar increase in FFO Y-O-Y. Black Creek Industrial REIT IV, with its portfolio focused on industrial properties, performed as expected in accordance with the listed REIT data cited above. The REIT’s FFO swung from a negative $807 thousand in Q1 2019 to $12.653 million for Q1 2020. Despite its concentration in grocery-anchored retail, Phillips Edison& Company saw an 11.5% increase in FFO from Q1 2019, from $80.12 million to $90.16 million for Q1 2020. Among multifamily-focused REITs, Resource Real Estate Opportunity REIT had an increase in FFO Y-O-Y of 97%, from $2.20 million in Q1 2019 to $4.34 million in Q1 2020. 

Several diversified nontraded REITs had significant positive swings in FFO.  Pacific Oak Strategic Opportunity REIT went from negative $303 thousand in FFO in Q1 2019 to $18.25 million in Q1 2020. Carter Validus Mission Critical REIT II, with assets divided among data centers and healthcare properties, had a 45% increase in FFO, from $22.61 million in Q1 2019 to $32.73 million in Q1 2020.  Hines Global REIT (+66.7%) and Hines Global Income Trust (+56.9%) both had increases in FFO over the same time period from their globally diversified portfolios.

Two nontraded REITs with hospitality assets, Hospitality Investors Trust and Moody National REIT II, had trends in FFO that reflected the same impacts displayed in the listed REIT reports. Hospitality Investor Trust’s FFO fell deeper into the red, from negative $12.67 million in Q1 2019 to negative $44.21 million in Q1 2020. Moody National REIT II’s FFO went from a positive $384 thousand in Q1 2019 to a negative $6.38 million in Q1 2020.

Among 47 nontraded REITs with FFO reported for both Q1 2019 and Q1 2020, 21 had increases in FFO Y-O-Y and 26 had decreases. As cited in a previous article, Blackstone Real Estate Income Trust had the largest absolute swing in FFO, from $85.44 million in Q1 2019 to a negative $877.15 million in Q1 2020. That swing was largely due to unrealized losses in the value of real estate assets in the REIT’s $37 billion portfolio.

Sources:  SNL, S&P Global Market Intelligence, SEC, Blue Vault