WASHINGTON, D.C. (Mar. 13, 2025) – REITs posted record-high funds from operations (FFO) in the fourth quarter of 2024 and continued to have strong balance sheets with well-structured debt, according to Nareit’s quarterly REIT Industry Tracker released today.
“REITs delivered strong operating performance despite an increase in long-term interest rates toward the end of last year,” said Nareit Executive Vice President of Research and Investor Outreach John Worth. “That performance confirms our belief that REITs are well-positioned to take advantage of accretive growth opportunities as they appear throughout 2025.”
Year-over-Year Increases in FFO and NOI Highlight REITs’ Operational Resilience
The REIT Industry Tracker data for the fourth quarter of 2024 show that FFO reached a record high of $20.9 billion—a 11.4% year-over-year increase. Meanwhile, net operating income (NOI) reached $29.8 billion, which is 5.5% higher than last year, and 65.5% of REITs reported an increased NOI from one year ago. In addition, same-store NOI experienced a 3.2% year-over-year gain, demonstrating that REITs outpaced inflation in the fourth quarter, which was 2.9%.
Strong Occupancy Rates Add to REITs’ Operational Strength
Occupancy of total REIT-owned properties was 93.3%, according to the REIT Industry Tracker. Retail led (97.0%), followed by apartments (95.7%), and industrial (95.0%). Office was the only sector below 95%, coming in at 86.2%.
Balance Sheets Continue to Have Well-Structured Debt, Low Levels of Leverage
REITs continue to have strong balance sheets, characterized by well-structured debt; 79.7% of REITs’ total debt was unsecured, while 92.4% of listed REITs’ total debt was at a fixed rate. In addition, on average:
- Leverage ratios were low with debt-to-market assets at 32.4%.
- Interest expense to NOI ratio was also low at 23.2%.
- Weighted average term to maturity of REIT debt was 6.4 years.
- Weighted average interest rate on total debt was 4.1%.
“REITs’ strong balance sheets remain a source of resilience in today’s interest rate environment,” said Nareit Senior Vice President of Research Edward Pierzak. “This should come as no surprise. Our recent market commentary series, which analyzes REITs’ performance in high, medium, and low interest rate environments, their performance in periods of rising and falling interest rates, and REITs’ relationship with 10-year Treasury yields, show that historically, the interest rate environment doesn’t negatively affect REITs’ performance nearly as much some narratives would have you believe. In fact, the analyses show that REITs have often performed well during times of rising, medium, and high interest rates.”
For more data on REITs’ operational fundamentals, please read the complete Q4 2024 REIT Industry Tracker.