real estate was the secondworstperforming sector after technology in 2022 primarily because of multiple rate hikes the federal reserve raised the benchmark federal funds rate seven times last year to the highest level in 15 years to mitigate inflationary pressures the sp united states reit index plunged 27 in 2022 the benchmark sp 500 index in comparison is down 194 over the past year the recessionary concerns have also battered real estate investment trusts reits as demand for specific real estate properties such as housing and commercial office properties plummeted after a stellar run in 2021 housing demand plunged by 30 in november last year the permanent shift toward a remote working culture along with mass layoffs also harmed commercial office properties as the inflation levels are still well above the fed’s target of 2 the central bank is expected to stick to its hawkish monetary policies “there’s an expectation really that the services inflation will not move down so quickly so we’ll have to stay at it” fed chairman jerome powell said “we may have to raise rates higher to get where we want to go” some of the hardesthit reits are avalonbay communities inc avb is a residential reit that owns 88405 apartments across 12 states it won the nareit 2022 leader in the light award reflecting its superior environmental social and governance esg efforts but shares of avalonbay communities declined 361 in 2022 several analysts downgraded the stock anticipating underperformance amid the fed’s continued hawkish stance and normalizing rental rates last month aperture investors analyst adam kramer downgraded avb stock from overweight to equalweight while goldman sach analyst chandi luthra downgraded the stock from buy to neutral also jp morgan analysts downgraded avalonbay communities from neutral to underweight on dec 16 this comes after the reit revised its fiscal 2022 core funds from operations ffo per share guidance from 976996 to 974984 avalonbay communities pays 636 per share as dividends annually yielding 394 its fouryear average dividend yield stands at 323 over the past five years the reit’s dividend payouts grew at a meager 23 compound annual growth rate cagr shares of chigacobased equity residential eqr declined 348 over the past year given the tremendous macroeconomic turbulence equity residential’s financials have taken a hit in recent quarters in the third quarter that ended on sept 30 the reit’s earnings per share eps fell 252 yearoveryear to 086 equity residential’s normalized ffo per share increased 195 yearoveryear from 077 in the third quarter of 2021 to 092 in the third quarter of last year the reit pays 250 in dividends annually translating to a 424 yield equity residential raised its annual dividend payout by 9 cents or 373 from 241 in 2021 to 250 last year despite the softening rental rates the reit’s management has remained bullish regarding its 2023 growth prospects “the substantial embedded growth in our rent roll and our financially resilient and highly employable resident base leaves us wellpositioned to deliver aboveaverage results in 2023 despite likely macroeconomic turbulence longer term we will continue to benefit from trends such as high singlefamily housing costs favorable demographics and an overall deficit in housing across the country” equity residential president and ceo mark parrell said manhattan new york’s largest commercial landlord sl green realty corp slg has had a dismal year sl green stock plummeted 544 last year making it one of the worstperforming office reits in 2022 analysts have also maintained a bearish sentiment regarding sl green realty in december sl green stock was downgraded by bmo capital markets analyst john kim scotiabank analyst nicholas yulico and citigroup analyst nicholas joseph the commercial reit has been battered by the declining demand for office space over the past two years for the nine months ended sept 30 sl green realty reported a net loss of 287 million or 47 cents per share this compares with the 4861 million net income generated over the same period of 2021 the reit slashed its dividend per share by 129 to 03108 last month it pays 325 in dividends annually translating to a 964 yield as recession concerns loom the possibility of speedy revival is slim for new york city’s largest landlord the consensus ffo estimate of 572 for fiscal 2023 indicates a 141 decline yearoveryear analysts expect the reit’s revenue to improve by 24 in this year 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 inhouse 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 more on real estate from benzinga   none bezosbacked startup lets you become a landlord with 100   none this fund is looking to 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