Australian REITs are slow in recovering from the financial downturn compared with their global counterparts, SNL reports. Between Dec. 31, 2007, and March 2, 2012, A-REITs posted an average total return of negative 44.18%, compared with negative 26.57% posted by the SNL Europe REIT index. In the U.S., REITs posted positive returns during that period, of 21.08%, as realized by the SNL U.S. REIT Equity index. To further their recovery, A-REITs have adopted defensive strategies, such as dispositions of their overseas portfolios.
U.S. equity REITS are outperforming banks in terms of share price and total returns, as well as dividend yields, SNL reports. The SNL U.S. REIT Equity Index posted a 58.35% price return between January 2008 and December 2011. The SNL U.S. Bank Index posted a negative 17.52% price return for the same time period. The Standard & Poor's 500 index returned 39.23%.
One-third of REITs tracked by SNL Financial raised their quarterly dividends last year. That was a 17% increase from 2010. At 49 of the REITs that raised dividends in 2011, the increases were "sharp," meaning 5% or more.
Forty-three of the traded and nontraded U.S. equity REITs tracked by SNL have used term loans, and these REITs have demonstrated greater flexibility as they recycle and upgrade properties, the research company found. On a sector basis, the office category leads with $2.54 billion outstanding through seven term loans. Within this group, Alexandria Real Estate Equities leads, with two term loans totaling $1 billion and representing 37.6% of its total debt at the end of the third quarter.
SNL reports that mortgage REITs have been dropping leverage from their portfolios since 2007, noting that only two senior debt capital raises from mortgage REITs have occurred this year. Meanwhile, mortgage REITs have become active issuers of common stock.