Publicly-traded REITs posted 6.3% year-over-year net operating income growth, with over 60% posting increases in funds from operations and 75% reporting annual gains, according to Nareit’s most recent REIT Industry Tracker.
In addition, REITs maintained balance sheet discipline, with an average leverage ratio of just 36%.
That is the backdrop for the FTSE Nareit U.S. All Equity REIT index, with total returns up 10.5% year-to-date through the end of February, outpacing the S&P 500 by more than 9 percentage points. (The index has fallen slightly in March, amid broader market volatility, but maintained that spread with the broader equities market.)
Wealth Management spoke with Nareit’s Ed Pierzak, senior vice president of research, and Nicole Furnari, vice president of research, about the REIT performance as well as its latest global active manager report.
This interview has been edited for length and clarity.
Wealth Management: Let’s start with the latest industry tracker. How did public REITs do in the fourth quarter of 2025?
Ed Pierzak: Operational performance was quite solid. In aggregate, NOI [net operating income] was up 6.3% year-over-year and on a same-store basis, was up 3.7%. So REITs were doing well, especially as it compares to inflation.
Another area on the operational front is occupancy rates. Typically, we focus on the four traditional property types to give us an indication. Occupancy rates for retail, industrial, apartments and office have all maintained their levels. If you do year-over-year comparisons, there are some slight increases. Notably, for three of the four sectors, excluding office, they’ve maintained occupancy rates in the mid to upper 90% range. Office, meanwhile, is at 87%, which is still a strong showing, especially compared with private real estate market metrics.
REITs also continue to maintain disciplined balance sheets. Leverage ratios and debt-to-asset ratios remain quite low. The weighted average term to maturity stands at about six years, and the weighted average interest rate is 4.1%.
Just shy of 90% of total debt is fixed-rate, and 80% of it is unsecured. We view that as a competitive advantage for REITs. They can access debt quite quickly in large amounts and at great rates.
WM: Can you put those NOI numbers into context of how they compare to other recent years?
EP: The current year-over-year is a bit higher than what we’ve seen in the recent past. In 2024, it was 5.2%, so the NOI number is a real strong showing.
WM: On the debt front, how active were REITs in 2025 in accessing debt?
EP: REITs issued $44 billion in debt in 2025. In 2024, it was $48 billion. In 2023, it was $29 billion. Looking back to 2022, which is when you saw rates spike, REITs issued about $13 billion. So, in the last two years it’s settled in this mid to upper $40 billion range. If you go further back to 2020 and 2021, it was $73 billion. As rates have gone up, issuance has tapered off a little, but it is off its lows.
WM: Pivoting to year-to-date performance, how are REITs doing compared with the broader equities market?
EP: The all-equity index was up a little over 10.5% through the end of February. One major sector that had some negative returns is office. Compare the index with the S&P 500, which was less than 1% through the end of February.
The potential for relative outperformance by REITs was something we had touched upon in our 2026 outlook. We made the comparison by looking at price-to-earnings and price-to-FFO ratios and saw that the S&P 500’s price-to-earnings ratios were quite high. If you dug into that, you saw it was a tech market rally that pushed it higher and that the Mag 7 accounted for roughly 35% of the S&P 500. We’ve now seen some softness on the tech side and softness in the S&P 500, while REITs have come out strong, so that divergence between the broad equity and REIT markets has tightened a bit. We had an expectation for relative outperformance, and that’s coming to fruition.
WM: And how about so far in March, which has been eventful, to put it mildly.
EP: That outperformance has continued. We have seen softness on both sides, but the overall delta between the S&P 500 and REITs has remained in excess of 9%. All equity REITs were up 8.41% through March 10, while the S&P 500 was down 0.69%.
WM: Anything notable by property sector at the high or low ends?
EP: The main laggard this year is office, which is down a little more than 14%. And residential has had some softness and is negative. I think some of that stems from the fundamentals in the housing markets.
At the high end, no surprise, data centers have posted the highest year-to-date returns, just shy of 22%. Specialty REITs are up as well, but keep in mind that’s driven by one constituent that has also got a focus on data centers.
WM: Lastly, what are the highlights from the global active manager tracker?
Nicole Funari: There was a bit of rebalancing toward the index weights. There are not many outliers that are overweight or underweight. There was a bit of a pullback from a focus on U.S. REITs. Most of the rebalancing went into Asia, with slightly less into Europe and the Middle East.
The biggest gainer, not surprisingly, was healthcare REITs in America. Diversified REITs in Asia are still strong.
WM: Which segments are the most overweight relative to index weights?
NF: In North America, the biggest overweight is data centers, which are at 138% of their index weight in active manager portfolios.
WM: Does it say anything interesting in and of itself that active managers are not that divergent from REIT indexes?
NF: I can’t entirely speculate on what’s going on, but a rebalancing of portfolios to where markets are sitting is an indication of where their heads might be at.
