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REITs Take a Hit After S&P Sector Debut … and other REIT news

30 Jan 2017

Last fall, REITs at last headlined their own real estate sector on the S&P 500 – a much-awaited move with high hopes of attracting billions of dollars in new capital to REITs and other publicly traded real estate companies.


But the market hasn’t been so kind to REITs, according to National Real Estate Investor.

Real estate has underperformed the S&P 500 since it debuted 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, the newspaper reported.


“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,” wrote National Real Estate Investor. “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.”


Yet not all recent REIT news is negative. reports that commercial real estate executives apparently are upbeat on industrial, infrastructure and multifamily asset classes for 2017, according to the 2017 Real Confidence Executive Index. notes that the industrial sector took the top spot as the preferred asset type for investment, with a 40 percent year-over-year allocation increase in private equity selections and a 61 percent increase in REIT selections.


Multifamily was the second investment choice among respondents for both private equity and REITs. The year-over-year allocation increase was minimal for REITs, but 27 percent higher for private equity. Meanwhile, allocations to the infrastructure sector grew by 216 percent from the 2016 survey.


In Georgia, meanwhile, Wheeler Real Estate Investment Trust acquired two BI-LO-anchored shopping centers located in Georgia and South Carolina.


Shopping Center Business reported that the acquisitions include Tri-County Plaza, a 67,577-square-foot shopping center located in Royston, Georgia; and Sangaree Plaza, a 66,948-square-foot shopping center located in Summerville, South Carolina. BI-LO recently executed lease extensions at both locations.