Majority of US REITs set to report lower FFO per share for Q4'23

More than half of the real estate investment trusts are expected to report declines in funds from operations per share for the fourth quarter of 2023, according to a consensus of analyst estimates compiled by S&P Global Market Intelligence.

The analysis includes US equity real estate investment trusts with more than $200 million in market capitalization as of Jan. 16 with at least three earnings estimates for the fiscal quarter ended Dec. 31, 2023.

FFO per share

Consensus estimates for REITs indicate a median 0.6% year-over-year drop in FFO per share for the fourth quarter of 2023. Funds from operations (FFO) per share is forecast to drop by a median 0.8% quarterly.

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Hotel REITs are projected to report the largest median year-over-year drop in FFO per share for the quarter at 18.9%. The office sector placed next, with estimates showing a median 10.5% decline year over year.

On the other end, consensus FFO per share estimates for the industrial sector indicate a 5.8% increase year over year on a median basis. That said, FFO per share is also expected to be down 0.8% on a sequential basis.

The residential sector is also predicted to report an increase in FFO per share for the quarter, with expectations of 4.7% year over year and 1.2% quarter-over-quarter gains.

Adjusted funds from operations per share

When looking at adjusted funds from operations (AFFO) per share estimates for the fourth quarter of 2023, the industrial sector again is forecast to record the highest median year-over-year increase, at 6.0%. Sequentially, AFFO per share is expected to fall 2.6%.

AFFO estimates for shopping center REITs are also showing annual AFFO per share growth by a median of 4.9%.

On the other hand, estimates for the self-storage sector are showing the largest year-over-year decline, at 10.7%. Diversified and hotel REITs are also forecast to report annual AFFO per share median declines of 4.1% and 4.0%, respectively.

EBITDA

Only two REIT sectors, hotel and office, are estimated to report year-over-year declines in EBITDA for the fourth quarter of 2023, with median drops of 3.0% and 2.2%, respectively.

The "other retail" sector, which includes single-tenant retail and outlet center REITs, is at the top of the chart with the highest estimated median year-over-year growth in EBITDA at 15.3%. The industrial sector follows in the second spot at 10.1%.