The FTSE Nareit All Equity REITs Index (pdf) posted a total return of 4.2% in February as broader market equities fell, with the Russell 1000 declining 3.2% and the Dow Jones U.S. Total Stock Market falling 3.1%.
The outperformance likely reflects a combination of falling long-term interest rates, concerns about tech valuations, and a strong REIT earnings season. On a year-to-date basis, REITs are up 5.2% while outperforming the Russell 1000 by 4 percentage points.
The yield on the 10-year Treasury fell 35 basis points in February, ending the month at 4.20%. As of Feb. 28, the dividend yield on the FTSE Nareit All Equity REITs Index was 3.79% and the FTSE Nareit Mortgage REITs Index yielded 11.39%, compared to 1.24% for the S&P 500.
As shown in the table above, the 10-year Treasury yield continued to decline from its recent peak in January near 4.8% to end February at 4.2%. During this time REITs have posted a total return of 7.1%.
Diversified, telecommunications, and health care led in February, with respective returns of 9.6%, 9.5%, and 9.4%. Lodging/resorts lagged with a total return of -5.2%, followed by specialty at -4.0%, and office at -3.9%.
The FTSE Nareit Mortgage REITs Index rose 6.1% in February and is up 11.8% on a year-to-date basis. Home financing rose 8.4% for the month and is up 15.3% for the year, while commercial financing rose 5.5% on a monthly basis and is up 5.7% year-to-date.