While multifamily REITs have enjoyed strong fundamentals, returns from the sector continue to lag behind the broader REIT market. Industry analysts are attributing the sector’s performance to investors’ concerns with competition from the single-family home market and a muddled employment picture.
Multifamily REITs have posted total returns of 3.9 percent for the year as of April 22, trailing the average 2013 gains of 12.4 percent for all equity REITs, according to data from the FTSE NAREIT U.S. Real Estate Index. In comparison, the S&P 500 has posted returns of 10.2 percent for the same time period. In 2012 multifamily REIT returns were 6.9 percent, compared to 19.7 percent for all equity REITs.
“The markets have not been kind to multifamily REIT stockholders,” said Jim Stevens, analyst with research firm SNL Financial. Multifamily REITs’ lukewarm returns have come as projections for the growth in the sector’s funds from operations (FFO) have dropped.
Read more...Sector Focus: Multifamily Momentum Showing Signs of Slowing via REIT.com