- REIT returns are up over 6% in 2026 despite a 100 basis point rise in the 10-year Treasury yield, and Cohen & Steers sees earnings growth near 9% this year.
- Hoya Capital says REIT-to-rate correlations are at a four-year low, 58 of 98 REITs that issued guidance boosted their outlook, and pipelines are about 40% below the 2022 peak.
- Nareit says REITs raised $19.8B in Q3 and $65.7B year to date, but debt fell to 50% of the total from 59% and the average coupon rose to 5.4%.
Investors have traditionally bought REITs when rates fall, but fundamentals are outweighing rising rates this year, according to CNBC’s Property Play newsletter.
Equity REITs are up more than 6% year to date, per the FTSE Nareit All REIT Index, and capital markets remain open: Nareit says REITs raised $19.8B in the third quarter.
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Returns Hold Up Against Higher Rates
Higher borrowing costs hurt commercial property from 2022 through 2024 by cutting asset values, and heavy construction in several sectors slowed rent and cash flow growth.
A new Cohen & Steers report notes that the link between REIT returns and 10-year Treasury yields has changed several times. Rate levels and rate moves, taken by themselves, have not predicted REIT performance.
Earnings Growth Leads the Comeback
Cohen & Steers’ real estate strategy head, Seth Laughlin, told CNBC the 10-year yield is up about 100 basis points over the past year, which forces every asset class to compete for yield.
Even so, he put REIT earnings growth near 9% this year and about 8% next year. He argues that new supply is cresting, income growth is picking up and REITs look attractively priced relative to stocks.
Fundamentals Do the Heavy Lifting
Hoya Capital Real Estate’s David Auerbach says the sensitivity of REITs to rates is the weakest in about four years. His report, “The Rate Shock That Didn’t Break REITs,” notes that 58 of 98 REITs giving full-year guidance lifted their forecasts.
Building has also been restrained. Excluding data centers, REIT building pipelines sit roughly 40% under both the 2022 high and 2019 levels, whereas data center pipelines are seven times larger than in 2019.
Auerbach credits solid property cash flow, dividend coverage and stronger balance sheets for helping REITs cope with the rate shock.
Sector Returns Split
Hotels, data centers and senior housing are posting double-digit returns, CNBC reports, and industrial, regional mall and even office REITs are also in positive territory.
Apartment REITs are still negative amid oversupply and softer rents, though CNBC notes that rising rates should eventually help rental demand by keeping would-be buyers out of homeownership.
Nareit’s data show capital following some of the same themes, with health care ($9.5B), retail ($4.7B) and data centers ($4.3B) leading second-quarter REIT acquisitions.
Capital Is Flowing, at a Higher Cost
REITs raised $19.8B in capital in Q3 via secondary debt and equity offerings, equaling Q2’s pace, per Nareit. The year-to-date total of $65.7B is close to the $65.9B raised through Q3 2025, a figure that leaves out that quarter’s at-the-market issuance.
Debt supplied 50% of the capital raised through Q3 2026, down from 59% a year earlier, and Q3 debt offerings totaled $14.9B. The weighted average coupon on REIT debt reached 5.4%, compared with 4.7% in Q1. The IPO market went quiet after an active first half, with none in Q3.
Public M&A Stays Active
Nareit counted three public REIT deals announced in Q3, worth $8.6B. For 2026 overall, 14 acquisitions of listed REITs worth $100.9B have been announced, including six public-to-public deals at $75.6B and eight privatizations at $25.3B.
Rising yields have slowed that pace, as CRE Daily reported when REIT M&A stalled over a buyer-seller gap.
Why It Matters
Cohen & Steers’ Seth Laughlin told CNBC, “The truth is, under the hood, the economy is really healthy, and I think about REITs as sort of the landlord to the broader economy.”
The two reports point the same way: earnings growth and restrained supply are offsetting the rate shock for now. The comeback is uneven, though. A 5.4% coupon raises the hurdle for acquisitions on cap rate and NOI growth, and REITs fell 5.7% in September when the 10-year yield reached 5.27%.
What’s Next
Watch whether earnings growth near 8% holds in 2027, as Cohen & Steers projects, and whether more REITs raise guidance. Q4 issuance will show whether the IPO window reopens and whether REITs favor equity or accept higher debt coupons.
