US REIT stocks fall deeper into negative territory in Q3

Publicly traded U.S. equity real estate investment trusts significantly underperformed the broader market in the third quarter.

The Dow Jones Equity All REIT Index recorded a total return of negative 10.8% for the period, compared to a negative 4.9% return for the S&P 500, according to S&P Global Market Intelligence data.

On a one-year basis the gap was much narrower, though REIT stocks again trailed the wider market. The S&P 500 generated a negative 15.5% return over that time period, compared with a negative 16.4% return for the Dow Jones Equity All REIT Index.

Each of the Dow Jones U.S. real estate sector indexes finished the third quarter in the red.

Self-storage REITs were the best performers as the Dow Jones U.S. Real Estate Self Storage Index experienced a total return of negative 2.6% in the quarter. The regional mall and hotel sectors followed, logging returns of negative 3.9% and negative 4.0%, respectively.

The healthcare REIT index was the worst performing property sector, posting a return of negative 15.9%. The industrial and manufactured homes REIT indexes followed with returns of negative 14.1% and negative 12.7%, respectively.

Top-performing REITs

STORE Capital Corp., which specializes in single-tenant operational real estate, posted the highest total return among U.S. REITs with market capitalizations of more than $200 million at 21.7%. An investor group comprised of GIC Pte. Ltd. and Oak Street Real Estate Capital LLC announced on Sept. 15 that it intended to buy the company in an all-cash transaction for $14 billion.

Multifamily REIT Aimco finished second, with a total return of 14.3% for the third quarter. The company was spun off from Apartment Income REIT Corp. in December 2020 with a new board and management team. As of Sept. 23, the company has achieved total stockholder returns of 56%, according to a proxy statement.

Hotel REIT Ashford Hospitality Trust Inc. rounded out the top-three performing REIT stocks, with a return of 13.9% for the quarter.

Bottom-performing REITs

Industrial Logistics Properties Trust recorded the lowest total return during the quarter, at negative 60.9%.

Diversified Healthcare Trust and Franklin Street Properties Corp. were next with returns of negative 45.3% and negative 36.8%, respectively.