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US REITs close 2023 with a strong Q4, outperforming the broader market

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US REITs close 2023 with a strong Q4, outperforming the broader market

Share prices for US real estate investment trust stocks jumped in the fourth quarter of 2023, outperforming the broader market.

The Dow Jones Equity All REIT Index closed the quarter with a 17.9% total return, while the S&P 500 logged an 11.7% return for the quarter.

The jump came after a poor performance in the prior quarter when the Dow Jones Equity All REIT Index recorded a negative 8.4% return.

The strong fourth quarter carried over to an 11.3% return for 2023 as a whole for the REIT-focused index, underperforming the S&P 500's 26.3% return for the year.

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Sector returns

All Dow Jones US Real Estate sector indexes closed the fourth quarter in the black.

SNL Image– For further analysis, try the Worldwide Real Estate Total Return Analysis Excel template.
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The Dow Jones US Real Estate Regional Malls Index closed the recent quarter with the highest total return, at 34.3%. Within the mall sector, Macerich Co. held the highest quarterly return, at 43.8%, followed by Simon Property Group Inc. with a 33.9% return. Meanwhile, CBL & Associates Properties Inc. logged a 16.4% return for the quarter.

The self-storage REIT index placed second, with a 22.6% return for the fourth quarter, while the office REIT index followed closely behind with a 22.4% return.

Public Storage, the largest self-storage REIT by market capitalization, closed the recent quarter with a 17.0% return, while Extra Space Storage Inc. recorded a return of 33.3%. Meanwhile, CubeSmart and National Storage Affiliates Trust logged returns of 22.9% and 32.5%, respectively.

On the other end, the Dow Jones US Real Estate Apartments Index ended the fourth quarter with the smallest return of the group, at 8.9%.

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Top-performing REITs

Healthcare REIT Diversified Healthcare Trust held the highest total return for the fourth quarter among all REITs with market caps greater than $200 million, at 93.9%.

Diversified Healthcare Trust's share price rebounded in 2023 to $3.74 per share at year-end, after falling from $3.09 per share down to 65 cents per share in 2022.

Office REIT Office Properties Income Trust placed second, with a return of 89.3% for the fourth quarter. For 2023 as a whole, however, Office Properties Income Trust's share price is down, recording a total return of negative 35.7%.

Diversified Healthcare Trust and Office Properties Income Trust announced an all-stock merger April 11, 2023. However, they mutually terminated the merger agreement Sept. 1, 2023.

Industrial-focused Industrial Logistics Properties Trust held the third-highest total return for the fourth quarter, at 63.3%.

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Bottom-performing REITs

Only seven REITs above $200 million market capitalization logged negative returns for the fourth quarter, the largest of which was Belpointe PREP LLC at negative 9.9%.

Healthcare REIT Community Healthcare Trust Inc. recorded the second-lowest return, at negative 8.8%, followed by diversified REIT NexPoint Diversified Real Estate Trust at negative 7.1%.

Rounding out the list are two additional healthcare REITs, Medical Properties Trust Inc. and Omega Healthcare Investors Inc., along with two multifamily REITs, Veris Residential Inc. and Centerspace.

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