Contact Us

REITs Eked Out A Gain Year-Over-Year. Here Are The Winners And Losers For 2023

Despite real estate industry headwinds in a time of high interest rates and sluggish deal volumes, REITs as a whole managed a net gain year-over-year. The FTSE Nareit All Equity REITs Index was up 7.2% as of the week of Dec. 18.

But the overall performance of the index masks a complicated year for REITs, which faced varying challenges depending on their focus and structure.

The following are the top five and the bottom five performers among REITs for the year, gauged by percentage change in stock price from one year ago. The metric may not tell the whole story, but it does reflect the judgment of the market.

Best Performers


Diversified Healthcare Trust

Gain: 369.93%

Diversified Healthcare Trust had a tumultuous ride in 2023, but ultimately gained more in terms of percentage than any other REIT. The caveat is that the company stock went from penny-stock territory a year ago to trading at about $3.56 as of Dec 21. DHC has a portfolio of more than 8.8M SF medical office properties and life sciences assets, along with 27,000 senior living units.

In April, a merger between DHC and Office Properties Income Trust was announced, but stiff opposition by shareholders ultimately put the kibosh on the deal. Opponents argued the merger would load DHC with weak office properties, while mainly benefiting asset management company RMR Group, which manages both REITs.

DHC's net loss was lower during the third quarter at $65.7M, compared to $81.4M a year earlier, and its funds from operation ended in positive territory in Q3 2023, up nearly 159% compared with a year earlier. The company has $700M in debt maturing in 2024 and about $500M in 2025.

Angel Oak Mortgage

Gain: 156.11%

Angel Oak specializes in first lien nonqualified mortgage loans and other mortgage-related assets. A non-QM is a loan product that doesn’t conform with the lending guidelines set by the Consumer Financial Protection Bureau. The company has acquired $2.6B in residential mortgage loans since the beginning of 2021 and securitized $2B in such loans.

The company's mortgage portfolio is roughly 71% loan-to-value, and the borrowers' average credit score is a high 740, according to Chief Investment Officer Namit Sinha.

“That’s not a credit profile that is the first to get impacted even in a slowdown or a recessionary environment,” Sinha said during a November earnings call, when it reported net income of $8.2M in Q3 2023, up from a loss of $83.3M during the same quarter last year.

“If we do go into a slowdown or a recession, you’re going to start seeing the impact more on the subprime-ish part of the portfolio mix, which we really do not do much of. So our overall portfolio delinquencies are expected to be muted even under a more successful environment,” Sinha said.

Tanger Outlets

Gain: 61.11%

Tanger Outlets is the only retail specialist in the top five. It holds a portfolio of 39 outlet centers and open-air lifestyle centers totaling about 15M SF. It has been busy lately making acquisitions in the sector, buying properties in Alabama and North Carolina in November and opening an outlet mall in Nashville in October.

The company’s net income during the third quarter of this year came in at $27.2M, compared to $23M a year earlier, and FFO rose as well, to $55.8M during Q3 2023, up year-over-year from $51.7M.

“Throughout economic cycles, we have proven the resilience of the outlet distribution channel,” Tanger CEO Steven Tanger said during the Q3 2023 earnings call in November. “In good times, people like a bargain, and in tough times, people need a bargain."

Seven Hills Realty Trust

Gain: 59.94%

Seven Hills Realty Trust originates and invests in first mortgage loans secured by middle market — at $100M in valuation — and other value-add CRE assets. The company reported net income of $7.4M in Q3, up from $5.1M a year earlier.

During the REIT's most recent earnings call in November, Seven Hills President Tom Lorenzini said market psychology stands to boost the company's prospects.

“The market is starting to realize that we’re going to remain in an elevated interest rate period or elevated compared to the last several years anyway,” Lorenzini said.

“And then everything is going to begin to adjust ... We’re starting to see some sellers become more realistic in the transactions that we’re looking at ... once people realize kind of what the new rules of the game are as far as the cost of capital, we’ll begin to see more trades.”

SL Green Realty Corp.

Gain: 48.94%

SL Green Realty Corp. is New York City's largest office landlord, with 59 buildings totaling 32.5M SF, including ownership interests in 28.8M SF of Manhattan assets. Despite the headwinds facing the office sector, the REIT has outpaced other office specialists, though it turned in a net loss of $24M in Q3 2023, compared to net income of $7.4M a year earlier.

“No one is saying office isn’t in a tough spot, but NYC leasing today clearly favors Grand Central and Park Avenue,” Piper Sandler analyst Alexander Goldfarb wrote in September, pointing out that 55% of SL Green’s portfolio is in those neighborhoods.

Even with the threats facing office landlords, SL Green is well-positioned to handle debt maturities and lease expirations, Goldfarb wrote.

Other top 10 gainers: Welltower, Park Hotels & Resorts, Vornado Realty Trust, Empire State Realty Trust and Macerich.

Worst Performers


CorEnergy Infrastructure

Loss: 91.08%

Earlier this month, the New York Stock Exchange moved to delist CorEnergy Infrastructure and suspend trading in the company's shares. The NYSE's listing standard requires at least $15M in average market cap over a period of 30 trading days, a standard it said the company failed to meet.

The company said it will appeal the delisting, which would trigger a requirement to repurchase CorEnergy convertible notes at par value. In its September earnings report, the company explained that it didn't have “sufficient cash on hand or available liquidity” to repurchase all of the notes, which could put the company out of business.

CorEnergy, which owns energy infrastructure, hasn't made a profit since 2018 as debt service has eaten up its revenue. It is trying to sell assets to raise funds, but it isn't clear if that will be enough to save the company.

Ashford Hospitality Trust

Loss: 61.9%

Dallas-based Ashford Hospitality Trust had a tough year, but its debt issues go back further than 2023. During the worst of the pandemic, the company sold a New York City hotel to satisfy lenders and borrowed $200M to keep afloat.

More recently, Ashford agreed to transfer 19 distressed Bay Area hotels, which were part of a $982M mortgage pool, back to lenders rather than pay $255M to extend their loans. In November, Ashford creditors requested that a court-appointed receiver take over seven of the company's properties.

The company is facing its debt woes despite a bounce back in the hotel industry and its own metrics. Ashford reported that its revenue per available room in Q3 was up 4% compared with a year earlier.

Medical Properties Trust

Loss: 51.03%

Medical Properties Trust is under pressure from upcoming debt maturities and more limited access to capital compared to other REITs in the medical office space, S&P Global reports. Its debt maturities are manageable through 2024, but the company has nearly $1.4B of debt maturing in 2025, nearly $3B in 2026 and $1.6B in 2027.

The company said it will explore asset sales and joint ventures to help deal with the upcoming maturities, but S&P notes that could be difficult as access to capital for potential buyers is limited, and the need for regulatory approvals for some sales might delay deals.

Complicating matters is that Medical Properties' largest operator, Steward Health Care, hasn't paid its full rent on time recently, which poses a risk to the REIT's cash flow when liquidity is already under pressure. Additionally, short seller Viceroy Research targeted MPT this year, issuing a number of reports and social media posts about Medical Properties and discouraging investment in the stock. Medical Properties has taken Viceroy Research to court, alleging the company defamed the REIT to drive its stock price down.

Office Properties Income Trust

Loss: 46.38%

Office Properties Income Trust was the other half of the Diversified Healthcare Trust merger that didn't happen, leaving OPI to its own devices. One of the main objections to the deal was the relative weakness of OPI.

The company's operating cash flows have dropped to $109M from $152M a year ago, while capital expenditures have increased, causing free cash flow to go from a positive $15M to negative $65M, Seeking Alpha reports.

As an office specialist, the company has been facing particularly strong headwinds, with tenants increasingly reluctant to commit to sizable and lengthy leases.

“Lease gestation periods remains protracted compared to a few years ago, although we are increasingly seeing tenants with large space requirements come to the table well in advance of lease expirations to engage in conversations,” CEO Christopher Bilotto during the company's most recent earnings call in October.

American Strategic Investment Co.

Loss: 45.34%

American Strategic Investment Co., which owns office and retail assets in New York City, reported improvement during the third quarter of 2023, but it wasn't enough to reverse overall investor skepticism about the company.

The company's net loss decreased to $9.4M last quarter from $11.1M in Q3 2022. Funds from operations also improved, turning in a Q3 2023 loss of $2.5M compared to a loss of $4.1M a year prior.

“As we continue to see a return to office, we believe we are well-situated for continued leasing growth as a result of our close proximity to major transportation,” CEO Michael Anderson said during the company's earnings call in November. “We also continue to proactively monetize our portfolio by selling noncore properties.”

Other bottom 10 REITs: Braemer Hotels & Resorts, Creative Media & Community Trust, Orion Office REIT, City Office REIT and Gladstone Commercial Corp.