The 2 REIT Benchmark ETFs End 2022 Down By More Than 25%

Real estate investment trusts (REITs) were deeply affected by the Federal Reserve’s actions in 2022, which led to higher interest rates. Even as investors anticipated an eventual lowering later in 2023 or at least by 2024, sellers remained in control of REIT shares all year.

Real Estate Select Sector SPDR Fund XLRE started the year at $50 and closed at $36.93 for a 26% loss of value from beginning to end.

iShares U. S. Real Estate ETF IYR kicked off the year at $112.50 and dropped to $84.19 by the end of it. That’s a decline of 25.16%.

The Standard & Poor’s 500 was off by 20% for the year, so both of the major REIT funds did worse than the market as a whole — by more than 5%. 

When real estate investment trusts are forced to pay more to borrow money it can hurt previous business plans that had worked. As the buying dries up in the sector, the underlying value of properties drops. This adjustment to the new interest rate reality is ongoing and can be seen in the price of REITs.

This SPDR Fund holds 34 publicly traded real estate investment trusts and provides a basic view of how the sector as a whole is doing. Although it bounced off of the October lows, the fund is having a tough time staying above the uptrending 200-week moving average (the red line). It’s not a bullish sign for the group that the 50-week moving average (the blue line) is now trending downward.

This exchange-traded fund (ETF), managed by Blackrock, is a broad-based fund now holding 84 publicly traded real estate investment trusts. Even with the greater number of REIT components, the price chart has the same look as the XLRE with the 200-week moving average seeming to provide resistance and the 50-week moving average trending down since the early part of 2022.

Weekly REIT Report: REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it’s too late. Benzinga’s in-house real estate research team has been working hard to identify the greatest opportunities in today’s market, which you can gain access to for free by signing up for Benzinga’s Weekly REIT Report.

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