Amidst ongoing uncertainty in the banking industry and worry over upcoming debt maturities, first-quarter data from Nareit’s Total REIT Industry Tracker Series may provide some relief. The T-Tracker data showed that 76% of REITs’ total debt is unsecured and 87% of listed REITs’ total debt is at a fixed rate. Leverage ratios remained modest, with a debt-to-market assets ratio standing at 33.9%. Furthermore, the weight average term to maturity of REIT debts was 82 months while the weight average interest rate on total debts stood at 3.9%.
John Worth, Executive Vice President of Research and Investor Outreach for Nareit noted that many REITS have reduced their leverage and locked in low fixed rates during this past decade which has led to “sound balance sheets” helping them weather economic uncertainty over the last year successfully. He added that these balance sheets will help them handle tighter credit conditions as well as an ongoing high interest rate environment going forward too.
The T-Tracker also reported an implied cap rate for Q1 2023 being 5.9%, more than 50 basis points higher than private market transaction cap rates but 180 bps lower than private market appraisal cap rates; suggesting public real estate markets are priced significantly lower compared to their private counterparts – although this gap has been shrinking due to changes in both public & private valuations according Ed Pierzak Senior Vice President or Research for Nareit who believes it will continue closing further into next year too .
Operationally speaking FFO totaled $18 billion representing a 5% increase from last year while net operating income increased 2%, same store NOI by 7 % & dividends paid out were up 8 % totaling $14 billion .
