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REITs Stumble After S&P Debut

January 17, 2017

REITs Stumble After S&P Debut

January 13, 2017 | By  | National Real Estate Investor

REITs landed in a spotlight of their own last fall when they officially stepped out of the shadow of financials to headline their own real estate sector on the S&P 500. It was—and is—a big, long-awaited move. Industry observers anticipate that this could be a “major step” in attracting billions of dollars in new capital to REITs and other publicly-traded real estate companies.

Yet a less than stellar performance for the S&P 500 Real Estate sector during its first few months has taken some of the wind out of the sails. Real estate has been underperforming on the S&P 500 since it was added as a separate category, effective after market close on Aug. 31. During the fourth quarter, the S&P 500 Real Estate sector reported total returns of -4.41 percent compared to 3.25 percent on the overall S&P 500 Index.

Industry experts have varying opinions on the cause for that underperformance in a market where real estate fundamentals across most property types have continued to improve. One likely culprit is hyper-sensitivity to rising interest rates. The 10-year Treasury increased almost 100 basis points in the fourth quarter, from roughly 1.55 to 2.45 percent.

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Loreen M. Gilbert, CIMA, AIF, CRC, CLTC – President, WealthWise Financial Services
Blue Vault
July 6, 2016

Our firm has been using Blue Vault from the first year it was available.

We have found it to be a valuable tool to verify what wholesalers tell us and to dig deep into how the reported investments are really performing.

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