In part due to a favorable interest rate environment U.S. mortgage REIT stocks outperformed the broader equity market for the fourth consecutive year in 2012, according to the National Association of Real Estate Investment Trusts.
The FTSE NAREIT Mortgage REITs Index provided a 19.89% total return for 2012.
The highest performer was the
The home financing sector also delivered high returns at 16.38%.
According to NAREIT president and CEO Steven Wechsler, while REITs historically have “a strong track record of delivering income,” in the past few years, including 2012, and thanks to a continuing low-interest rate environment, REITs have become “increasingly important.”
The FTSE NAREIT Mortgage REITs Index yielded 12.93% at yearend, with the home financing sector yielding 13.84% and the commercial financing sector yielding 8.29%.
By comparison, NAREIT reports, the dividend yield of the S&P 500 companies at Dec. 31 was much lower at 2.22%.
The strength of the mortgage REIT market is supported by the overall performance of the REIT market, according to NAREIT.
Last year’s findings show almost all sectors of the REIT market delivered double-digit returns for the year. In 2012 the FTSE NAREIT All REITs Index, which includes both equity and mortgage REITs, delivered a 20.14% total return.
Because they channel investment capital “to support the growth of the real estate market and the broader economy,” Wechsler argues, REITs represent well-constructed investment portfolio options that attract investors from all walks of life.
Apparently, investors find attractive the fact that the U.S. REIT industry “continued to maintain conservative balance sheets in 2012.”
