Why does GAAP Return on Equity understate REIT economics?

Accounting rules require real estate to be depreciated over a defined life, producing a large non-cash charge that reduces reported net income. In most property types the underlying buildings retain economic value far longer than their accounting life, and well-maintained properties can appreciate rather than depreciate. The GAAP depreciation charge therefore depresses reported earnings and Return on Equity in a way that does not reflect economic performance, which is why AFFO-based measures are more informative for this sector.

What are funds from operations and why do real estate investors use them?

Funds from operations, or FFO, adds non-cash depreciation and amortization back to net income while removing gains and losses on property sales. Adjusted FFO, or AFFO, further subtracts recurring capital expenditures needed to maintain the property portfolio. These measures approximate the sustainable cash a REIT can distribute and are widely used in the industry as the denominator for valuation multiples and as the numerator for sector-specific return measures that sidestep the GAAP depreciation distortion.

How does leverage affect REIT Return on Equity readings?

Real estate investment is routinely financed with significant debt secured against property, often at loan-to-value ratios in the fifty to sixty percent range or higher. Leverage amplifies both Return on Equity when property returns exceed borrowing costs and losses when they do not. Reading REIT Return on Equity alongside disclosed debt-to-gross-asset ratios and weighted-average cost of debt shows how much of reported returns reflect underlying property performance versus the leverage applied on top.

Top Real Estate Stocks by Return on Equity

Top real estate companies ranked by return on equity, latest annual filings.

What Return on Equity Means for Real Estate Companies

Return on Equity divides net income by shareholder equity. In real estate, the GAAP ratio is often depressed because property depreciation under accounting rules understates the economic life of real assets. Real estate investors typically evaluate REITs through funds from operations and adjusted funds from operations instead, which add back non-cash depreciation to produce a figure closer to economic earnings on the property portfolio.

Why It Matters Less in Real Estate

GAAP Return on Equity understates real estate economics because depreciation is a significant non-cash charge that does not reflect actual building wear in most property types. An AFFO-based return on equity often tells a very different, and more useful, story. For this sector the headline ratio is best read alongside recurring cash distribution history and portfolio occupancy trends rather than in isolation, where it understates operational performance.

What to Read Alongside

Pair Return on Equity with Net Income to see reported GAAP earnings, Long-term Debt to frame portfolio leverage, and Free Cash Flow for a cleaner view of cash-based returns on the underlying properties.

Data as of FY 2025 56 companies Rhea AI

#	Symbol	Company	Sector
1	UNIT	Uniti Group Inc.	Real Estate	343.07%	$2.33B
2	SPG	Simon Property Group, Inc.	Real Estate	102.99%	$71.94B
3	AMT	American Tower Corporation	Real Estate	71.96%	$79.77B
4	LAMR	Lamar Advertising Company	Real Estate	57.30%	$16.24B
5	RHP	Ryman Hospitality Properties, Inc.	Real Estate	32.45%	$7.84B
6	ELS	Equity LifeStyle Properties, Inc.	Real Estate	22.89%	$12.55B
7	OUT	OUTFRONT Media Inc.	Real Estate	20.69%	$5.48B
8	SUI	Sun Communities, Inc.	Real Estate	20.33%	$14.66B
9	PSA	Public Storage	Real Estate	19.29%	$61.07B
10	VNO	Vornado Realty Trust	Real Estate	15.65%	$7.27B
11	CIGI	Colliers International Group Inc.	Real Estate	14.64%	$5.05B
12	FSV	FirstService Corporation	Real Estate	13.86%	$6.27B
13	CBRE	CBRE Group, Inc.	Real Estate	13.03%	$42.70B
14	BRX	Brixmor Property Group Inc.	Real Estate	12.83%	$9.25B
15	ESS	Essex Property Trust, Inc.	Real Estate	12.68%	$18.32B
16	FRT	Federal Realty Investment Trust	Real Estate	12.65%	$10.25B
17	CUBE	CubeSmart	Real Estate	12.18%	$9.42B
18	HST	Host Hotels & Resorts, Inc.	Real Estate	11.67%	$16.01B
19	UDR	UDR, Inc.	Real Estate	11.49%	$12.25B
20	JLL	Jones Lang LaSalle Incorporated	Real Estate	10.56%	$16.73B
21	VICI	VICI Properties Inc.	Real Estate	9.98%	$29.22B
22	EQIX	Equinix, Inc.	Real Estate	9.54%	$103.89B
23	FOR	Forestar Group Inc.	Real Estate	9.50%	$1.49B
24	AVB	AvalonBay Communities, Inc.	Real Estate	9.10%	$26.64B
25	NMRK	Newmark Group, Inc.	Real Estate	8.63%	$2.66B
26	DOUG	Douglas Elliman Inc.	Real Estate	8.27%	$0.16B
27	MAA	Mid-America Apartment Communities, Inc.	Real Estate	7.89%	$15.50B
28	REG	Regency Centers Corporation	Real Estate	7.64%	$14.09B
29	EXR	Extra Space Storage Inc.	Real Estate	7.25%	$31.59B
30	DRH	DiamondRock Hospitality Company	Real Estate	7.01%	$2.59B
31	RITM	Rithm Capital Corp.	Real Estate	6.73%	$5.55B
32	PLD	PROLOGIS, INC.	Real Estate	6.26%	$131.92B
33	INVH	Invitation Homes Inc.	Real Estate	6.17%	$18.04B
34	STWD	Starwood Property Trust, Inc.	Real Estate	6.06%	$5.90B
35	WPC	W. P. Carey Inc.	Real Estate	5.74%	$16.37B
36	DLR	Digital Realty Trust, Inc.	Real Estate	5.73%	$71.25B
37	CCS	Century Communities, Inc.	Real Estate	5.69%	$1.96B
38	APLE	Apple Hospitality REIT, Inc.	Real Estate	5.57%	$3.77B
39	XHR	Xenia Hotels & Resorts, Inc.	Real Estate	5.56%	$1.82B
40	BXP	BXP, Inc.	Real Estate	5.38%	$10.98B
41	KIM	Kimco Realty Corp.	Real Estate	5.33%	$16.39B
42	BEKE	KE Holdings Inc.	Real Estate	4.51%	$18.68B
43	CWK	Cushman & Wakefield Limited	Real Estate	4.51%	$3.21B
44	WY	Weyerhaeuser Company	Real Estate	3.44%	$18.34B
45	HHH	Howard Hughes Holdings Inc.	Real Estate	3.28%	$4.06B
46	O	Realty Income Corporation	Real Estate	2.68%	$59.01B
47	REXR	Rexford Industrial Realty, Inc.	Real Estate	2.60%	$8.14B
48	WELL	Welltower Inc.	Real Estate	2.22%	$170.05B
49	AHR	American Healthcare REIT, Inc.	Real Estate	2.13%	$10.54B
50	VTR	Ventas, Inc.	Real Estate	2.09%	$47.32B
51	RLJ	RLJ Lodging Trust	Real Estate	1.31%	$1.81B
52	PCH	PotlatchDeltic Corporation	Real Estate	1.07%	$3.23B
53	DOC	Healthpeak Properties, Inc.	Real Estate	0.95%	$14.55B
54	DEI	Douglas Emmett, Inc.	Real Estate	0.85%	$1.93B
55	CSGP	CoStar Group, Inc.	Real Estate	0.08%	$11.99B
56	OHI	Omega Healthcare Investors, Inc.	Real Estate	0.01%	$14.75B

Companies with return on equity above 500%, or shareholder equity below 1% of total assets, are excluded: when equity is near zero the ratio becomes unstable and unrepresentative. Ratio rankings also require at least $1B in annual revenue.

How this ranking is built

Companies are ranked by return on equity as reported in their most recent annual filing with the SEC. Figures shown are in US dollars (or percent, as noted), rounded to two decimals.

Source: annual 10-K / 20-F filings from companies trading on US exchanges (NYSE, Nasdaq, AMEX).
Fiscal year: whichever annual period the company has most recently filed. Fiscal years don't always align with the calendar year, so the "as of FY" stamp above reflects the most common year across the table.
Filtered out: warrants, preferred shares, and duplicate listings that share a parent company's financials.
Update cadence: refreshed as companies file new annual reports (typically within 60–90 days of fiscal year end).

Not financial advice. This is a research tool, not a recommendation.