Historical Risk Premium of Real Estate Investment Trusts (REITs)

What is the historical risk premium for investing in publicly traded equity real estate investment trusts (REITs)? The chart below illustrates the historical realized risk premium of equity REITs (as measured by the FTSE NAREIT Equity Total Return Index) in excess of the 10 year treasury from February 1, 1972 (inception) to December 31, 2012.

The chart illustrates that REITs have historically earned a sizable risk premium in excess of the 10 year treasury of approximately 6% over the entire period (4.0% during the 1st half and 8.1% during the second half).