The REIT Weekly

Last week’s news offers a brief look at REITs in the first quarter and the influence of the economic recovery. Sources show self-storage REITs and green investments are on the rise.

The slow and steady economic recovery has been a boon for landlords. Office space demands have continued to increase in the first quarter, increasing occupancy rates. When the landlords are REITs, interest rates remain a risk to valuations and especially to those REITs using long-term leases because their rental structures cannot quickly reset higher.

In the market at large, REIT returns have surpassed gains in the first quarter. REIT returns were softer in March compared to earlier in the year. Total returns from the FTSE NAREIT All REIT Index gained just 0.3 percent in March, compared with a gain of 0.8 percent for the S&P 500 Index. Experts think of this as a normal pause and feel that fundamentals are solid and will continue to let REITs grow.

Self-storage REITs are making tracks in the economy this year. During the first quarter of 2014, self-storage REITs were out done only by apartments in terms of growth in the U.S. REIT market. The publicly traded self-storage sector was reported as having a 13.12 percent increase during the first quarter compared to apartments, having a 13.84 percent gain.

A number of influential companies, such as Fannie Mae and Freddie Mac, are making increasing efforts to invest in environmentally friendly multifamily securities. Within the commercial real estate sector, green investments offer good and enhanced returns, a fact that REITs and their investors are familiar with. Green bonds, which are defined as instruments in which the proceeds are applied exclusively toward projects and activities that promote climate or other environmental sustainability initiatives, are spreading to other industries.