US REIT stocks outperform broader market in 2021

US equity real estate investment trust share prices rose in the fourth quarter of 2021, outperforming the broader market. The Dow Jones Equity All REIT index generated a 16.1% total return for the quarter, compared to an 11.0% return for the S&P 500.

For 2021 as a whole, the Dow Jones Equity All REIT index logged a 41.2% return, while the S&P 500 finished the year with a return of 28.7%.

All Dow Jones US real estate sector indexes recorded positive returns for the fourth quarter.

Industrial REITs saw the largest gains, with the Dow Jones U.S. Real Estate Industrial index closing the quarter with a 30.0% return. The self-storage index followed closely behind at 28.2%, while the regional mall index took the third spot with a return of 22.5%.

The hotel index logged the smallest return of the group, at 1.6%, followed by the healthcare and office sector indexes at 5.3% and 8.8%, respectively.

Multifamily REIT Bluerock Residential Growth REIT Inc. closed the quarter with the highest return of all U.S. REITs with above $200 million market capitalization, at 108.4%. Bluerock Residential's share price spiked more than 76% on Dec. 20, 2021, following its announcement to be acquired by affiliates of Blackstone Inc. for $24.25 per share, an all-cash deal valued at $3.6 billion.

Preferred Apartment Communities Inc. followed next, also logging a significant share-price gain near the end of the year. On the same day as the Bluerock Residential merger announcement, Preferred Apartment Communities' share price also jumped 15% and continued to rise through the end of the year, closing the quarter with a 49.5% return.

Farmland REIT Gladstone Land Corp. rounded out the three top-performing REIT stocks with a total return of 49.0% for the recent quarter, while industrial REITs Rexford Industrial Realty Inc. and Plymouth Industrial REIT Inc. followed next with returns of 43.4% and 41.6%, respectively.

On the other end of the spectrum, 21 REIT stocks closed the fourth quarter with negative returns.

Hotel REIT Ashford Hospitality Trust Inc. was among the bottom of the group, finishing the quarter with a return of negative 34.8%, as well as negative 62.9% for 2021 as a whole. Despite its drop in share price, Ashford Hospitality, along with the entire hotel REIT sector, made positive strides in 2021 to recover from the COVID-19 pandemic. As of the third quarter, Ashford Hospitality's same-store occupancy reached 62.8%, while same-store RevPAR grew to $97.59, its highest rates since the fourth quarter of 2019. A growing COVID-19 case count stemming from the omicron variant, however, continues to be a concern for the hotel sector.

Timber REIT CatchMark Timber Trust Inc. followed next, closing the quarter with a return of negative 25.9%. CatchMark's share price fell significantly following its Oct. 15, 2021, announcement to end its joint venture with TexMark Timber Treasury LP. Due to the estimated loss of asset management fee revenue from the joint venture, CatchMark also cut its quarterly dividend rate by 44.4% to 7.5 cents per share.

In a press release, CatchMark Chairman Douglas Rubenstein commented that recalibrating its dividend distribution will allow the company to grow its core portfolio, ultimately enhancing earnings growth and net asset value in the long run.

Hotel-focused Service Properties Trust closed out the three worst-performing REIT stocks, with a total return of negative 21.5% for the quarter.