Started from the bottom (community shopping centers in 1961),
. . . now we’re here (post offices were the most recent REIT listing)!
Ever since their inception back in 1960, the total number and market cap of REITs, or real estate investment trusts, has steadily grown. But just how much have REITs grown over the decades?
Firstly, consider that in 1971 there were just 34 REITs in the United States. Now, fast forward to 1990 where there were almost 120, and finally pause at 2021 where we have over 220 of them in the States.
Additionally, it is estimated that around 145 million Americans are invested in REITs in some way, whether through their company 401(k), their IRA, a pension plan, and other investment funds.
Still, that’s just a taste of the fascinating REIT statistics you ought to know going into 2022.
Read on to learn more about this interesting investment type and how you can invest in them.
Note: Unless otherwise noted, all data are derived from, and apply only to REITs in the United States of America..
Let’s start with a few key REIT stats:
- In 1971 there were just 34 REITs.
- Nareit’s directory lists over 230 public, public non-listed, and private REITs in 2021.
- 145 million Americans are invested in REITs in some capacity.
- REITs own more than 515,000 properties across the USA.
- As of July 2021, U.S. listed REITs have a total equity market cap of $1.57 trillion.
- REITs own over 200,000 outdoor ad placement platforms.
- Over 148,000 single-family rental properties in the U.S. are owned by REITs.
- All Equity REITs index has bested the S&P 500 in 15 of the last 25 years
- Overall dividend yield for REITs is 5.58% as of 2021.
- REITs paid out $53.9 billion in dividends during 2020.
What are REITs?
REIT stands for Real Estate Investment Trust. At a very fundamental level, REITs own, operate, or finance income-generating real estate across a diverse group of property sectors. For instance, sectors like:
- office buildings
- apartment buildings
- warehouses
- self-storage facilities
- hospitals
- shopping centers
- hotels
- and even timberland.
For a clearer picture, here is Nareit’s timeline of REIT listings by property type:
Most REITs trade on major stock exchanges and all have to meet certain requirements in order to qualify as a REIT. Whether you know them or not, REIT owned real estate is pretty much in every state! And they often play a pivotal role in local communities as well as the U.S. economy overall.
Akin to mutual funds, REITs allow everyday people to pull their money together and access investments otherwise reserved for the bigger players such as Wall Street, banks, and hedge funds.
For instance, REITs allow you and just about anyone else to invest in portfolios of real estate in the same manner that you would invest in public companies. By purchasing individual company stock, or investing in them through a mutual fund and/or an exchange traded fund (ETF).
In addition, the stockholders of a REIT earn a share of the income produced without having to buy, manage or finance real estate. REITs generally must pay out at least 90% of their taxable income in the form of dividends to their shareholders, in order to avoid incurring a tax liability.
Be sure to read upon residential real estate stats and commercial real estate stats to get a better understanding of the current state of the real estate market and what REITs are exposed to.
How many REITs are there?
To answer that, let’s first look at the numbers from a few different perspectives:
- Roughly 1,100 REITs have filed tax returns with the IRS
- There are 231 public, public non-listed, and private REITS according to Nareit (But I thought you said 1,100 filed taxes? Indeed. The rest of them are most likely private REITs who are not registered with the SEC).
- Of the 231 total REITs listed on Nareit, 226 are publicly traded.
- According to the FTSE Nareit All REITs benchmark index, there are 219 REITs listed on the American Stock Exchange, NASDAQ, and the New York Stock Exchange.
Are these numbers making your head hurt? More of a visual learner? No worries, let’s put all this into perspective by visualizing the 13 different REIT sub-sectors, across equity and mortgage REITs.
REIT Sub-sectors overview
| Sub-sector | Publicly Traded | Public, Non-Listed | Private | Total REITs (2021) |
|---|---|---|---|---|
| Office | 19 | 3 | 1 | 23 |
| Industrial | 15 | 1 | 3 | 19 |
| Retail | 31 | 5 | 2 | 38 |
| Lodging / Resorts | 18 | 0 | 2 | 20 |
| Residential | 21 | 0 | 5 | 26 |
| Timberlands | 4 | 0 | 0 | 4 |
| Health Care | 16 | 3 | 1 | 20 |
| Self-storage | 6 | 1 | 0 | 7 |
| Infrastructure | 6 | 0 | 0 | 6 |
| Data Centers | 5 | 1 | 0 | 6 |
| Diversified | 21 | 5 | 0 | 26 |
| Specialty | 12 | 1 | 1 | 14 |
| Mortgage (mREITs) | 21 | 0 | 1 | 22 |
Hopefully the above table-format is much easier to digest. But let me save you some more leg work, the numbers above add up to:
- 195 publicly traded REITs (but keep in mind there are some which are not listed on Nareit),
- 20 public, non-listed REITs (these companies are open to all investors, however, they do not list their shares on major indices like the American Stock Exchange and NYSE), and
- finally there are 16 private REITs.
These REIT companies have headquarters across the nation, spanning 33 states as well as D.C. Furthermore, these real estate investment trusts own property throughout all the 50 states!
How big is the REIT market?
What do the assets of all of these REITs across America add up to? Quite a lot actually. REITs own more than 515,000 properties across the USA, and their real estate assets total to $3.5 trillion dollars.
Over $2.5 trillion of that figure is derived from public REITs (listed and non-listed ones), while the remainder is owned by privately held REITs.
REIT market capitalization
As of July 2021, U.S. listed REITs (aka publicly traded) have a total equity market cap of $1.577 trillion. And that figure includes mortgage REITs as well.
As we’ll see in the section on COVID ahead, the pandemic had an impact on REITS in 2020.
Which makes sense, as more than 90% of the REIT market capitalization is composed of commercial property owning REITs, an industry that was hit the hardest during the pandemic shutdowns.
As of June 2021, the ten largest REITs in the nation had a combine market cap of almost $122 billion dollars, the largest of which was the Simon Property Group REIT. The value of their outstanding shares of stock alone was $40.2 billion dollars.
REITs on the stock market
Since their introduction in the 1960s, REITs have grown on all fronts, and today there are over 180 REITs trading on the New York Stock Exchange, with an equity market capitalization of $1.37 trillion.
Furthermore, 28 REITs are listed on the S&P 500 benchmark index. They account for fewer than 3% of the S&P 500 index by market cap. When it comes to the small-cap oriented Russell 2000 index, however, REITs comprise roughly 8% of the index’s value.
Also as of July 2021, the average daily trading volume for publicly traded REITs was $8.3 billion, up from $6.4 billion in 2016 and more than double the 2011 figure of $3.8 billion.
Finally, throughout 2020, stock exchange listed REITs raised over $106 billion in public market offerings and REIT activities resulted in the pay out over $111 billion dollars in dividend income in 2019. While we’re on the topic of dividends, be sure to check out our dividend investing facts after your REIT adventure.
Sector REIT statistics
Now let’s look at some sector specific REIT statistics:
- There are 4 Infrastructure REITs in the U.S., they have a market cap of $252.1 billion
- 20 Residential sector REITs in total in the U.S., market cap of $225 billion.
- The U.S. has 5 public Data Center REITs with a total market cap of $137 billion.
- More than 16.5 million acres of timberland in the United States is owned by REITs.
- Retail and Self-Storage sectors are top 2021 YTD performers at 38.3% and 45.6%.
- REITs own over 200,000 outdoor ad placement platforms (mostly billboard, but others too).
- Over 148,000 single-family rental properties in the U.S. are owned by REITs.
- ‘Can you hear me now?’ In the U.S., REITs own more that 95,000 communication towers.
- More than 24,000 retail properties across the United States are owned by REITs.
Bet you didn’t realize so many of the building around you were REIT owned or operated? Well, get ready for even more action, because Nareit is predicting robust post-COVID economic growth for the REIT industry. Of course, no one can predict the future, but as of now REITs look well positioned.
Speaking of not being able to predict the future, these life insurance statistics will seriously make you consider getting a policy and finally achieving a peace of mind.
Average REIT returns
If you want to know one of the main reasons as to why REITs have become so popular, look no further than REIT performance vs. the S&P 500. To illustrate, the FTSE Nareit All Equity REITs index has bested the S&P 500 in 15 of the last 25 years, in other words 60% of the time.
Oh, and they offer an overall 5%+ dividend yield, which is more than double the S&P 500’s 2%. But if that doesn’t sound like much, let me assure you, it’s an impressive track record!
Still don’t believe me? Consider the fact that this equity REIT index’s current trailing 25-year annualized total return is 10.9%. Next, consider that if you held the index that whole time, your total return would be an impressive 1,225%. Not bad eh?
Therefore, it’s no wonder that roughly 80% of registered investment advisors recommend them to their clients. As far as the ideal portfolio allocation when it comes to REITs, multiple studies showed 5% to 15% to be the optimal amount REITs should take up in a well diversified portfolio.
Equity REITs versus S&P 500 returns
Once again, some things are better shown than told. Have a look at the table below illustrating the performance relationship between equity REITs and the Standard & Poor’s 500 benchmark index.
| Time Period | Equity REIT Total Return | S&P 500 Total Return | Difference |
|---|---|---|---|
| 2020 | (15.3%) | (5.0%) | (10.3%) |
| 1 Year | (7.3%) | 12.8% | (20.1%) |
| 3 Years | 3.4% | 10.2% | (6.9%) |
| 5 Years | 5.2% | 9.9% | (4.7%) |
| 10 Years | 9.6% | 13.2% | (3.6%) |
| 20 Years | 10.1% | 5.9% | 4.2% |
| 30 Years | 10.4% | 9.6% | 0.8% |
| Since 1972 | 11.3% | 10.5% | 0.8% |
At this point, you’re probably shaking your head at the dismal figures REITs put up in 2020. But in fact, all things considered, REITs weathered the storm relatively well. Considering the storm was one of the most uncertain and economically devastating periods of our time.
Yes, real estate was one of the most under-performing sector during the COVID-19 pandemic, but REITs were rather resilient during this turbulent period. In fact, the year-to-date return for the FTSE Nareit All Equity REITs index as of May 2021 was an impressive 18.1%, 4.3% above it’s pre-COVID high!
Furthermore, you may have noticed that the S&P has been dominating the equity REITs in the last 10 years, 5 years, 3 years, and the 1 year periods. This is due to the S&P 500 experiencing a record-long bull market whilst real estate was doing the opposite, under-performing.
But as an investor you need to look at the bigger picture, and if you zoom out to see the past 50 years for example (which includes bear markets and a few recessions), you will see real estate outperforming the S&P 500 in the pat 20 year, 30 year, and 48 year periods.
REIT dividend statistics
As of August 2021, the average dividend yield for the equity only REITs is 2.77%, however, when we add in the mortgage REITs to the mix the dividend yield increases to 5.58%. Now, the average dividend yield for the S&P 500 is roughly 2%, which is less than half of the REIT figure!
Of the dividends REITs paid out in 2020, and if we’re to go by the market cap-weighted average:
- 58% qualified as ordinary taxable income,
- 14% qualified as return of capital,
- and 28% qualified as long-term capital gains.
Next, let’s take a look at which REIT sub-sectors have the highest dividend yield.
REIT dividends by sub-sector
| Sub-sector | Dividend Yield (2021) |
|---|---|
| Industrial | 2.11% |
| Office | 3.39% |
| Retail | 3.96% |
| Residential | 2.38% |
| Diversified | 4.05 |
| Lodging/Resorts | .04% |
| Health Care | 3.88% |
| Self Storage | 2.52% |
| Timber | 2.30% |
| Infrastructure | 1.98% |
| Data Centers | 2.15% |
| Specialty | 4.44% |
| Mortgage REITs | 8.25% |
But how many REITs pay their shareholder these dividends at the end of the day? In fact, the majority do. Your average REIT will dish out 75% of its FFO (funds from operations) to shareholders in the form of dividends. With mortgage REITs paying out the most and office REITs paying out the least (hard-hit by the pandemic).
As of Q2 2021, FFO rose 19.8% quarter-over-quarter to $16.5 billion, more than making up for the pandemic decline. Furthermore, roughly two-third of all REITs reported higher funds from operations than a year ago.
In terms of the overall total paid out by REITs as of Q2 2021, dividends paid out by equity REITs came out to $11.2 billion while mortgage REIT dividends totaled $1.6 billion. For a combined total of $12.8 billion, a figure which is 4.3% higher than the same period for 2020.
How REITs affect the economy
What role do investment real estate trusts have on the U.S. economy, either directly or indirectly?
- In the U.S. REITs contributed roughly 2.6 million full-time jobs to the economy in 2019.
- This 2.6 million full-time jobs figure is derived from the REITs $173.3 billion in labor income.
- 1.7 million homes in the United States had financing help from mREITs, or mortgage REITS.
- 145 million American households are invested in REITs through some type of investment fund.
- Over 516,000 real estate properties are owned by REITs across the United States.
- In 2019 REITs spent $85 billion on new construction and maintenance of existing properties.
- Despite a turbulent pandemic year, REITs paid out $53.9 billion in dividends during 2020.
- REITs directly employed 274,000 full time employees in the United States.
- These full-time REIT employees earned $19.7 billion dollars of labor income.
- In 2019, REITs paid nearly $21 billion dollars in property taxes in the U.S.
As evidenced by the above mere highlights, REITs play a pretty significant role in our economy.
REITs as retirement investments
Life is just one big party while you’re still young, but one must have some sort of plan for the later years. Do REITs make the cut for a sound investment for retirement? Judging by their 10.4% annualized 30-year return, it certainly looks that way.
But first, let’s illustrate just how popular REITs have become for the American household. Back in 2001, around 65 million Americans owned REIT shares, in 2019 that figure stood at nearly 145 million. In other words, the percentage of American households owning REITs in some capacity went from 22.7% in 2001 to almost 45% in 2019.
In terms of owning REITs in retirement accounts, roughly 87 million Americans do so in some capacity. That includes Americans who own REITs as retirement investments directly, but also the ones who have REIT shares indirectly through financial vehicles such as mutual funds and ETFs.
Because Target Date Funds and Equity Funds increased their exposure to REITs, the average American’s 401k is more exposed to REIT investments as well. Read our 401k statistics every employee should know to discover some additional gems you can use going forward.
Have you started saving for retirement yet? Well, if you need a little nudge be sure to check out our retirement statistics that will shock you into starting to save, or saving more!
REITs during the COVID-19 pandemic
As if it wasn’t self-evident to us all, the real estate sector was one of the hardest-hit during the pandemic. With the exception of the Data Centers and Infrastructure sub-sectors, REIT returns in 2020 resemble a race to the bottom, with Mortgage REITs winning this biggest loser race.
Due to the stay-at-home orders and the shutting down of our economy, commercial real estate took a huge downturn. Stores were shut down, hotels, offices, etc. But the good news is REITs have begun to regain most of their losses and the near-future looks pretty bright for this investment type.
But we’re here to discuss the pandemic’s effect on REITs, that we shall do, and in what better way than through a visual of the havoc wrecked by the COVID-19 pandemic on REITs.
REIT sub-sector returns during the 2020 pandemic
| REIT Sector | Returns During Covid (2020) |
|---|---|
| Data Centers | 19.30% |
| Infrastructure | 17.90% |
| Industrial | (.80%) |
| Self-Storage | (5.80%) |
| Residential | (18.10%) |
| Specialty | (25.30%) |
| Office | (27.80%) |
| Health Care | (28.20%) |
| Timberland | (30.40%) |
| Diversified | (37.0%) |
| Retail | (44.20%) |
| Lodging/Resorts | (45.70%) |
| Mortgage REITs | (46.30%) |
As mentioned earlier, however, REITs are on the up again, and the recovery is picking up speed for a good number of REIT sub-sectors. As of May 2021, the all-equity REITs index was at 18.1%, more than 4 points higher than its pre-pandemic high. Also, Funds From Operations (FFO) was at 85% of pre-pandemic levels.
Furthermore, between Feb 2020 and May 2021, REIT returns ranged from a gain of 32.1% shown by Self-Storage, to a decrease of 19.8% shown by mortgage REITs. Other noteworthy winners of the same period were Timber (26.2%), Single Family Homes (21.2%), and Industrial (18.2%).
In terms of the anticipated recovery, it is important to remember just how diverse the REITs market truly is. Encompassing 13 sub-sectors and over 200 companies specializing in various businesses. Though a rising tide may lift all boats, some of them will experience higher and quicker returns than others.
How to invest in REITs?
Are you all loaded up with REIT knowledge from above and find yourself asking, “but how do I invest in a REIT?” The journey of a thousand miles begins with a single step. Here’s that first step.
Here are five ways to invest in REITs
- Private REITs (pretty exclusive, don’t have to disclose high level of information to investors).
- Risk: Often very illiquid. No corporate governance policies. Externally managed.
- Non-traded REITs (registered with SEC, but don’t trade on a major public exchange).
- Risk: Can charge high management fees. Usually very illiquid. Often externally managed.
- Publicly-traded REIT stocks (registered with SEC, trades on major public exchanges).
- Risk: Stock price can decline. High debt loads. Bad decision making by management.
- Publicly-traded REIT funds (offer exposure to the whole public REIT market as one).
- Risk: Rising interest rates. Narrow diversification, unlike broad diversification.
- REIT preferred stock (functions more like a bond than a stock, no stake in ongoing profits).
- Risk: Substantial increase in interest rate would likely hurt it’s performance.
Decide what type of REIT you want to invest in
As you’ve learned by now in this article, there are two main types of REITs, equity and mortgage REITs, or mREIT. Furthermore, there are 13 sub-sectors of REITs to consider. Some REITs stick to a sector, others invest in a mixture of property types, and are called Diversified REITs.
Weigh the benefits and disadvantages of investing in REITs
Benefits include: high-yield dividends, diversification, liquidity, inflation protection.
Risks include: interest rate risk, concentration risk, dividends being taxed as ordinary income.
Choose a REIT that’s right for you
Consider navigating to Nareit’s REIT and Publicly Traded Real Estate Company Directory where you can filter through various REIT sectors, public and private REITs, and even REITs from outside the U.S.
Head on over to your favorite broker
- TD Ameritrade
- E-Trade Financial
- Ally Invest
- Merrill Edge
- Robinhood
- Charles Schwab
- Fidelity Investments
- . . . and others.
These ETF statistics and these mutual fund statistics and industry trends will also help you better analyze your investing strategy and ideal portfolio composition target numbers. Of course there’s a lot more to buying and selling REITs than this cliff-notes simplification.
But I did say it was the first step and not the full journey of a thousand miles, did I not?
Parting Words
Thanks for sticking with me!
In a nutshell REITs can be a good way to achieve long-term growth and income with a relatively low to moderate amount of risk. However, it’s not all rainbows and butterflies year-in-and-year-out, as the 2020 pandemic has demonstrated.
As a long-term holder, there may be periods where your resolve will be tested, but remember to always zoom out and look at the bigger picture, and not just the week, month or year you’re currently in.
Not that historical performance is an indicator of the future by any means, but historically REITs have delivered some impressive total returns, via high and steady dividend income coupled with long-term capital appreciation.
Note on the numbers used in the article: In an effort to paint a fuller picture, the figures in this article were aggregated from numerous credible sources, who reported the results of their surveys at various points in time.
What to read next: 20+ Average American Savings Stats You Need to See
Sources
Nareit: REIT and Publicly Traded Real Estate Company Directory | Nareit: REITs Across America | Nareit: REITs by the Numbers | Nareit: REIT Watch | Nareit: 2021 Midyear Outlook for REITs | FTSE Russell | Nareit: Economic Contribution of REITs in the United States
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