Amidst ongoing uncertainty in the banking industry and worries over upcoming debt maturities, commercial real estate sector is feeling uneasy. However, first-quarter data from Nareit’s Total REIT Industry Tracker Series might provide some relief. The T-Tracker data reveals that REITs are generally well structured when it comes to their debt; 76% of total debt being unsecured and 87% at a fixed rate while leverage ratios remain modest with a 33.9% ratio of debt to market assets. Furthermore, the weight average term to maturity of REIT debt was 82 months with an interest rate on total debts standing at 3.9%.
John Worth, Executive Vice President of Research and Investor Outreach for Nareit stated that “REITs appear well positioned to navigate a period of higher interest rates and economic uncertainty” due largely in part because many have reduced their leverage as well as locked in low fixed rates during this past decade which has resulted in sound balance sheets able withstand last year’s capital market turbulence effectively . Additionally , T-Tracker data reported an implied cap rate for Q1 2023 at 5 . 9 % , more than 50 basis points (bps) higher than private market transaction cap rate yet 180 bps lower than private appraisal cap rate – suggesting public real estate markets are priced significantly lower compared to its private counterpart although gap between both markets continues closing gradually according Ed Pierzak Senior Vice President Research from Nareit .
Operationally speaking FFO totaled 18 . 7 billion representing 5 . 3 % increase year over year while net operating income increased by 2 . 2 % same store NOI up 7 .2%. Dividends paid amounted 14 point seven billion dollars reflecting 7 point seven percent growth compared previous twelve month period indicating continued strength across board despite current climate conditions
