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Real Estate Sector Posts Strong Q4 Earnings, Outperforming S&P 500 Sectors

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REITs outperformed their peers on the S&P 500 in the fourth quarter. The real estate sector exhibited the second-highest earnings growth of the S&P 500 sectors.

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Publicly traded REIT earnings jumped 13.8% year-to-year in Q4, compared to 9.9% year-to-year earnings per share growth for the S&P 500.

This investment activity illustrates a continued strength and resilience in the real estate sector amid the political and economic uncertainties of the new administration and talks of a March rate hike, according to the National Association of REITs' quarterly report.

“The fourth quarter earnings outperformance of the S&P 500 Real Estate Sector underscores the continued growth potential of U.S. Equity REITs and helps shed more light on the decision to elevate real estate into its own headline sector,” NAREIT president and CEO Steven Wechsler said.

Equity REITs, which make up 95% of the total Real Estate GICS sector market, have benefited from tightening commercial property fundamentals and the rising interest rate environment, which is hitting non-listed REITs a bit hard. 

“This real estate cycle still has room to run with net absorption outpacing the current pipeline of new development,” said Calvin Schnure, NAREIT senior vice president of research and economic analysis.