May 28, 2020
REITs’ funds from operations (FFO) saw a 9% quarterly decline in the first quarter, with about half of that shortfall coming from the lodging and hotel sector, Nareit reported. Since most of Q1 predated the COVID-19 crisis, Q2 results as measured by Nareit’s T-Tracker are likely to be quite a bit weaker,” said senior economist Calvin Schnure.
Schnure noted that regional malls also had a decline in earnings, and most other property sectors had modest declines. Industrial REITs, though, had a 21.7% increase in FFO, and single-family rental REITs saw a 7% FFO increase.
Despite the overall weakness in earnings, the T-Tracker shows that REITs had robust operating performance and a strong financial base entering Q2, Schnure noted.
“Financially, they are not going to be facing a lot of near-term cash crunch from refinancing debt maturities,” he said. “That’s going to give them financial resiliency to get through this crisis.”
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