REIT funds from operations per share predicted to drop in Q2 2024

Consensus estimates for US equity real estate investment trusts forecast a median 1.1% year-over-year drop in funds from operations per share for the second quarter of 2024.

On a quarterly basis, funds from operations (FFO) per share is estimated to grow by a slight 0.7% on a median basis, according to a consensus of analyst estimates compiled by S&P Global Market Intelligence.

The analysis includes US equity REITs with market capitalizations greater than $200 million as of July 15, and three or more S&P Capital IQ estimates for the fiscal quarter ended June 30.

Funds from operations per share

By property sector, consensus estimates for diversified and office REITs predict the largest median year-over-year declines in FFO per share, at 8.5% and 5.6%, respectively, followed by the self-storage REITs with an estimated 2.8% drop year over year.

On the other hand, consensus FFO per share estimates for industrial REITs show an estimated 5.4% increase on an annual basis, followed by the "other retail" sector, which includes single-tenant and outlet center REITs, with an estimated 3.9% median increase year over year.

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On a quarterly basis, hotel REITs are forecast to report FFO-per-share growth of 49%, the largest increase of the group. That being said, the estimates still sit 1.7% below the sector's FFO per share reported one year ago.

The regional mall sector is also estimated to grow FFO per share by 7.3% on a median basis quarter over quarter, as well as 2.2% year over year.

Adjusted funds from operations per share

Estimates for adjusted FFO (AFFO) per share indicate a 3.8% quarterly drop on a median basis and are down a slight 0.6% compared to year-ago numbers.

According to the estimates, nearly all property sectors are expected to report quarter-over-quarter declines in AFFO per share, with the exception of the hotel sector, which is forecast to see 7.4% median growth.

The shopping center sector has the largest estimated quarterly drop, at 11.5% on a median basis, followed by the industrial sector with an estimated 7.0% median quarterly decline.

On a year-over-year basis, the consensus estimates predict the regional mall sector will report the largest median increase, up 5.9%. The industrial and "other retail" sectors followed, both with 4.0% median year-over-year estimated gains.

EBITDA

Earnings estimates for the US REIT sector show a median 2.6% year-over-year increase in EBITDA as well as a 2.0% increase on a quarterly basis.

EBITDA estimates for the hotel sector forecast the largest growth quarter over quarter, while estimates for the "other retail" sector predict the median largest increase on an annual basis.