Almost two-thirds of real estate investment trusts reported year-over-year increases in funds from operations in the first quarter, but healthcare REITs saw a decrease of $999 million in FFO year over year.
That’s according to data from the National Association of Real Estate Investment Trusts’ T-tracker for the first quarter, released last week.
FFO equity for REITs overall was $18.8 billion in the first quarter, representing a 1% year-over-year increase.
“That modest growth, however, is because isolated issues in the health care sector significantly lowered overall FFO in a way that is not broadly representative of the industry’s health,” according to a blog post written in conjunction with the report. “In fact, 62.5% of REITs reported having year-over-year increases in FFO, and the aggregate year-over-year FFO growth excluding the healthcare sector was 6.9%.”
More than two-thirds of REITs also reported year-over-year increases in net operating income, according to Nareit. Healthcare REIT NOI, however, decreased by $96 million from the same quarter a year ago.
“In this higher-for-longer interest rate environment, REITs’ balance sheets remain in good shape, largely because REITs continue to exercise great discipline in managing them,” said Nareit Executive Vice President of Research & Investor Outreach John Worth. “That discipline, combined with REITs’ solid occupancy rates, is enabling REITs to navigate tighter credit conditions and the uncertainty surrounding when the Federal Reserve will cut rates.”
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