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Real Estate: pay and profit in the S&P 500

Vici Properties reports 28 employees and $2.7 billion of profit. This is the sector where Fair500's measures come closest to breaking down, and it is worth understanding why.

Real Estate has a median pay ratio of 123:1, comfortably below the index median of 196:1, and the third-highest median worker pay at $119,871. It also has a median profit per employee of $346,620, second only to Energy, and that figure is where the sector needs careful handling.

The headcount problem

Most companies here are REITs, and a REIT owns assets rather than operating them. The people who clean the hotel rooms, staff the shops and maintain the warehouses generally work for tenants, operators or contractors, and do not appear in the REIT's employee count.

The reported headcounts are consequently tiny relative to the economic activity involved:

Vici Properties owns casino and entertainment real estate leased to operators; its 28 employees are a corporate investment team. Host Hotels owns hotels operated under management agreements by Marriott and others; its 162 employees are asset managers, not hotel staff. Federal Realty reports 320 employees and $968,750 of profit per head.

Profit per employee is close to meaningless for these companies, and both it and the resulting pay-versus-profit score should be read as artefacts of legal structure rather than as statements about labour. Vici's 27:1 pay ratio and $468,119 median, the highest in the index, describe a 28-person investment firm, not a real-estate workforce.

Welltower

The sector contains the largest executive compensation figure in the S&P 500. Welltower posts a ratio of 2,290:1 on a median of $124,995, which is a well-paid workforce, because its three-year average CEO compensation is $286.2 million, driven by a single grant valued at roughly $821 million.

This is the case that most clearly justifies three-year smoothing. On the grant year alone the ratio would exceed 6,500:1; on either adjacent year it would sit near 140:1. Neither single-year figure describes the arrangement. The smoothed figure is still extraordinary, and it is meant to be.

The rest of the sector

The companies with real operating workforces look quite different. CBRE Group employs 155,000 people, by far the largest headcount in the sector, as a services business rather than an asset owner, and posts 341:1 on a median of $71,351. Iron Mountain at 442:1 on a $37,949 median across 29,400 employees is the sector's lowest median, reflecting a records-storage and logistics workforce.

The storage REITs sit in similar territory: Public Storage at 242:1 on $38,819 and Extra Space Storage at 248:1 on $52,643, both reflecting facility staff. Simon Property Group at 374:1 on $78,989 across 3,600 employees rounds out the wide end.

The residential REITs are the narrow end: Mid-America at 57:1 on $65,112, Essex at 63:1 on $113,049, Camden and Regency Centers at 64:1 on $154,922. Alexandria Real Estate at 47:1 on a $207,588 median across 514 employees is the sector's second-narrowest.

Two loss-makers

Alexandria Real Estate and Crown Castle each averaged a loss across the three-year window and appear in the map's "lost money" band. Crown Castle's figures were also corrected during our audit: its reported revenue initially captured only services income and omitted site-rental lease revenue, which understated the business by an order of magnitude.

Every real estate company in the S&P 500

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