Editor's note: The maps in this article automatically rotate through the 50%, 10% and 2% versions of the 2018 Modified Mercalli Intensity hazard maps, however not all forms of distribution allow for the rotating images. Click here to download the full report, which includes static images of all maps used, along with the charts and full REIT and property lists, or contact the product support team at Support.MI@spglobal.com.
In a recent analysis, S&P Global Market Intelligence analyzed properties owned by publicly traded real estate investment trusts in California to help evaluate each REIT's earthquake risk.
In total, S&P Global Market Intelligence identified 1,295 properties in California owned by U.S. REITs with a likely chance of experiencing very strong earthquake sometime in the next 50 years, along with an additional 2,385 properties with a slight 10% chance and another 235 with a rare 2% chance.
The analysis utilized the 2018 Modified Mercalli Intensity hazard maps, which can be used to show which areas of the contiguous U.S. are at higher risk of major earthquakes. The model shows the likelihood of peak ground acceleration motion at 50%, 10% and 2% probability of exceedance in the next 50 years. The results are then converted to the equivalent modified Mercalli intensity.
Using the hazard maps, S&P Global Market Intelligence was able to recognize REIT-owned properties in California that are in areas with a 50%, 10% and 2% chance of experiencing shaking equivalent to VII or greater on the modified Mercalli scale in the next 50 years.
While shaking intensity of VII is very strong, damage is typically negligible in buildings with good design but can cause considerable damage to those that are poorly built. Moving up to VIII intensity, even well-built structures can see slight damage, while ordinary buildings can experience substantial damage and even a partial collapse. Shaking at an intensity of IX, however, will cause considerable damage to even the best-designed structures.
American Homes 4 Rent's 106-home single-family rental portfolio in California's Inland Empire brought it to the top of the list with the largest number of properties owned by a U.S. REIT in the 50% chance of very strong shaking category. That being said, the individual addresses of each home in the portfolio are not reported in public filings, so it is possible not all 106 properties in the portfolio fall within the estimated VII-intensity area.
Multifamily REIT Essex Property Trust Inc. followed next with 90 properties in California with a likely chance of experiencing very strong shaking in the next 50 years, as well as an additional 103 properties with a 10% chance.
Extra Space Storage Inc., a self-storage REIT, rounded out the top three, with 79 California properties with a likely chance of experiencing very strong shaking in the next 50 years. Extra Space Storage also owns 111 with a 10% chance of very strong shaking and 19 with a rare 2% chance.
Industrial REIT Rexford Industrial Realty Inc. also owns 75 properties in California with a 50% chance of experiencing very strong shaking, while multifamily-focused Equity Residential and AvalonBay Communities Inc. own 60 and 48 properties, respectively, with a likely chance.
The ANSS Comprehensive Earthquake Catalog, a record of earthquakes globally created with data from contributing institutions, shows a gradual increase in the number of severe earthquakes recorded each year. That being said, according to the U.S. Geological Survey, or USGS, the increase in recorded earthquakes does not necessarily stem from an increase in earthquake occurrences, but instead an increase in the number and capabilities of seismic instruments that are able to record earthquakes.
The USGS noted that historic records lead them to expect about 16 major earthquakes worldwide in any given year, comprising roughly 15 in the magnitude 7.0 range, major earthquakes that cause serious damage, and one earthquake of magnitude 8.0 or greater, strong enough to totally destroy communities near its epicenter.
While magnitude and intensity measure different characteristics of earthquakes, with magnitude measuring the energy released at the source of the earthquake and intensity measuring the strength of shaking produced by the earthquake, a 7.0 magnitude earthquake has a typical intensity of roughly VIII or higher on the modified Mercalli scale at its epicenter.
In 2021, the ANSS Comprehensive Earthquake Catalog shows 16 earthquakes of magnitude 7.0 or higher year-to-date, with three above 8.0 in magnitude. That compares to nine earthquakes in 2020.
Other recent years show a higher number of major earthquakes than the long-term average, with 17 recorded in 2018, 19 in both 2015 and 2013 as well as 20 in 2011.
In the U.S., the vast majority of major earthquakes occur in or off the coast of California, as well as Alaska. That being said, in 1959 a magnitude 7.3 earthquake was recorded Gallatin County, Mont., near Hebgen Lake, and another 7.26 magnitude earthquake in 1954 in Churchill County, Nev., near Fairview Peak.
