Comparing the performance of a few REIT stock vs stock market index

Other than investing in residential real estate properties (single family houses or multi-family units), I also invest a lot in publicly-listed REITs. Over the last year, technology stocks suffered huge drops. Blue chip companies like Meta and Amazon are cut in half. The unicorns that used to be high flyers during the pandemic are cut by 80% or more. Zoom, sounds familiar? It’s the REITs holdings that kept my portfolio from suffering huge losses.

We all know the stock market has cycles and the real estate market also has cycles. I wonder how my favorite REIT stocks stack against the stock market index over the long term. So here is my list of favorite REIT stocks:

CPT: Camden Property Trust, apartment REIT, focused on western &southeastern regions of the country.

ESS: Essex Property Trust, apartment REIT, focused on California and Seattle.

SUI: Sun Communities, manufactured housing communities REIT, national operator.

ELS: Equity Lifestyle Properties, manufactured housing communities REIT, national operator.

SPG: Simon Property Group, premier shopping, dining, entertainment and mixed-use destinations

EPR: EPR Properties, experiential REIT, like movie theaters, water parks, ski resorts, golf entertainment complexes, public charter schools

ELS and SUI are my all-time favorites since mobile home REITs are the most recession-resistant type among all the REIT categories. CPT and ESS are multi-family REITs which are pretty resilient across economic cycles. People always need some place to live no matter the economy is good or bad. Office REITs were crushed during the pandemic and still struggles to recover after the pandemic is long over due to the hybrid working trend that refuses to go away. I normally don’t invest in SPG or EPR which are both strongly affected by business cycles. But the shopping malls and movie theaters are disproportionally impacted by the pandemic and still yet to recover to pre-pandemic levels. They pays really good dividends and have low sticker prices. So I loaded on some of those.

Long story short, I used Yahoo finance API to download the price history and dividends history of all the stocks. Then I wrote some Python code to compare the performance of these REIT stocks versus the stock market indexes. I use the ETF symbols SPY and QQQ to represent the SP 500 and Nasdaq indexes. Here is the result.

REITs vs Stock Market Index over last 20 years

You can see all the REITs except EPR beats SP 500 over the last 20 years. But only mobile home REITs beat Nasdaq over the last 20 years. Also, mobile home REITs beat Nasdaq with a smaller worst-case loss, which makes it more impressive. If not for the sake of diversity, I probably would put all my money in ELS and SUI. I also checked the last 10 years and last 15 years. ELS and SUI also beat QQQ.

REITs vs Stock Market Index over last 15 years
REITs vs Stock Market Index over last 10 years

On the side note, it’s a better bet to put your money into Nasdaq instead of SP500. Technology stocks beat diversified SP500 index over a long term. With the rising of AI technology, the performance of technology stocks will continue to beat SP500 over the next 10 years, I believe. Many industries will be disrupted by AI, but not real estate. No matter how advanced technology is, everyone still needs a house or an apartment to live in.

By | 2023-04-12T23:40:48+00:00 April 12th, 2023|REIT|Comments Off on Comparing the performance of a few REIT stock vs stock market index

About the Author:

I am a licensed real estate agent and loan originator living in Austin, the capital of the lone star state. I have rich experience and deep insight about residential and commercial real estate investing. Call or text me at 5125840805 if you need advice/assistance with real estate investment or would like to share investment experience/ideas with me.