Standard & Poor´s has started ranking publicly traded Real Estate Investment Trusts according to the growth and stability of their earnings and dividends. Of the 93 Reits added to S&P´s dividend ranking system, just two came out with top marks: Kimco Realty, the country´s largest owner of strip malls, and Mid-Atlantic Realty Trust, a shopping centre Reit. Both were classified 'A+'.
S&P´s rankings range from 'A+' to 'C', with a 'D' signifying that the company is in reorganisation. A 'B+' ranking is average. Ranking is based on per-share earnings and dividend records over a 10-year period.
FelCor Lodging Trust, Income Opportunity Realty Investors, La Quinta Corporation and Omega Healthcare Investors were all ranked 'C', the lowest.
S&P said the decision to add Reits to the 4,000-plus companies it already ranked was based on demand. 'Reits have not only outperformed the broader market for the past three years but have posted positive total returns in each year,' said Raymond Mathis, S&P´s Reit equity analyst. 'Retail Reits should continue to outperform, due to healthy levels of consumer spending.'
Retail Reits - those that specialise in factory outlets, regional malls, shopping centres and strip malls - have been a bright spot for investors as shoppers have continued to head to the tills.
Another factor driving performance is consolidation. 'Although some retailers have faced competitive pressures that have limited same store sales, many have chosen to grow by opening new locations, fueling demand for retail space,' said Mr Mathis. 'A wave of consolidation across the retail Reit sector has allowed improved efficiencies in serving nationwide retailers, boosting the shares of some property operators.'
This year, retail Reits are up about 15.74 per cent, according to the National Association of Real Estate Investment Trusts. The Composite Reit Index has risen nearly 11 per cent.
Source: Financial Times