Dzmitry Dzemidovich
Returns for equity REITs have seen their steepest decline this year since the great financial crisis, with the FTSE Nareit All Equity REITs index falling 27.46% in value by 2022.
The index fell 41.12% in 2008 and 19.05% in 2007, but much of it has increased in value in the following years. In 2020, the year of the outbreak of the COVID-19 pandemic, this index only decreased by 8.40%.
The entire real estate sector has experienced a rough year throughout 2022, with the Select Real Estate Sector SPDR ETF down 28.68% YTD.
By comparison, the S&P 500 index is down 19.44% in 2022.
Office REITs, notably, have lost 40.40% of their value in 2022. SL Green Realty (SLG) in particular fell by 56.66% in value compared to the beginning of the year, amid declining demand and occupancy rates for office properties and an increasingly popular culture of remote working. company is is expected to cut its dividend further in 2023.
Another office REIT Douglas Emmett (DEI) has fallen 55.09% this year.
Residential REITs are the next big laggard among subsectors, having lost 33.28% in value by 2022.
REITs in particular, compared to other subsectors, have performed better this year, down just 5.71%. In particular, the VICI Attribute (VICI) saw an 8.21% increase in profits, while Gaming and Entertainment Properties (GLPI) increased by 7.52% in value.
Meanwhile, mortgage REIT returns fell 35.08% amid a growing interest rate environment and deteriorating economic situation. real estate market.
Here’s a look at the subsector’s profitability:
