The median implied capitalization rate for publicly traded U.S. real estate investment trusts was roughly 7.0% at the end of the first quarter, representing a 24-basis-point increase year over year.
Implied cap rate is a measure of yield calculated as net operating income generated in the last-12-months divided by an implied real estate value based on the company's equity market capitalization and outstanding debts. Quarter over quarter, the median cap rate for REITs was about flat.
Regional mall REITs experienced the biggest year-over-year change in implied cap rates at quarter-end, rising to 7.6% from 5.5%. Hotel REITs saw a 37-basis-point increase year over year to 9.3% at the end of the quarter, the highest median implied cap rate of all REIT sectors.
At 5.2%, self-storage REITs traded at the lowest cap rate at quarter-end, followed by industrial REITs, which finished at a median cap rate of 5.6%, an increase over the year-ago figure of 5.3%.
Specialty REITs — comprising advertising, casino, communications, energy infrastructure, land, prison, timber and other specialty REITs — and data center REITs had implied median cap rates of 8.4% and 8.2%, respectively, at quarter-end. In the year-ago period, specialty REITs had a 9.0% median cap rate, while data center REITs' median implied cap rate was 7.2%.
Since spiking in 2009 during the financial crisis, implied cap rates for U.S. REITs trended downward for years before rising in 2018.
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Use S&P Global Market Intelligence's U.S. Real Estate Field Calculations template for a line-by-line breakout of the implied capitalization rate calculation. Other templates are also available in the Excel Template Library.