Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

1/1
Housing100logo.png
ETF express.png

Summary

  • U.S. equity markets retreated from yesterday's record-highs while long-term interest rates eased amid indications that the Biden Administration's proposed $2.3 trillion spending plan may face challenges from within its party.

  • Following gains of 1.4% yesterday, the S&P 500 finished lower by 0.1% today while the Dow Jones Industrial Average declined by 97 points following yesterday's 374-points rally.

  • Real estate and other yield-sensitive equity sectors were among the leaders today as the broad-based Equity REIT Index climbed by 0.3% with 16-of-19 property sectors in positive territory.

  • Welltower (WELL) jumped nearly 2% today after providing a business update in which it noted that COVID cases have seen a 99% decline in the trailing two-week case count since the peak in mid-January 2021.

  • Lamar Advertising (LAMR) announced that it has formed a subsidiary - Lamar Partnering Corporation (LPCXU) - a special purpose acquisition company ("SPAC") that has filed to raise $300M in an IPO.

Real Estate Daily Recap

U.S. equity markets retreated from yesterday's record-highs while long-term interest rates eased amid indications that the Biden Administration's proposed $2.3 trillion spending plan may face challenges from within its party. Following gains of 1.4% yesterday, the S&P 500 ETF (SPY) finished lower by 0.1% today while the Dow Jones Industrial Average (DJI) declined by 97 points following yesterday's 374-points rally. Real estate equities were among the leaders today as the broad-based Equity REIT ETFs (VNQ) climbed by 0.3% with 16-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) finished lower by 0.1%.

The 10-Year Treasury Yield pulled back 6 basis points to close at 1.66% after several key Senators indicated opposition to President Biden's proposed $2.3 trillion spending plan. Six of the eleven GICS equity sectors finished higher on the day, led to the upside by the Utilities (XLU) and Consumer Discretionary (XLY) sectors. Homebuilders and the broader Hoya Capital Housing Index were also among the leaders today, boosted by a Zillow (Z) report detailing the potentially enduring effects on the U.S. housing market, noting that "The pandemic has catalyzed purchases by millennial first-time buyers, many of whom can now work from anywhere."

Commercial Equity REITs

Healthcare: Welltower (WELL) jumped nearly 2% today after providing a business update in which it noted that it expects Q1 normalized FFO per share to come in at the top end of its 71 cents-76 cents guidance range. WELL also noted that it expects Q1 average occupancy for its Seniors Housing Operating ("SHO") portfolio to "finish favorably to the midpoint of its -275 to -375 basis points guidance range." 99% of WELL's senior housing communities are accepting new residents, up from 84% as of mid-January 2021 as COVID cases have seen a 99% decline in trailing two week (TTW) case count since peak in mid-January 2021. 99% of communities have zero reported resident COVID-19 cases on a TTW basis versus 64% in mid-January 2021.

Billboards: Lamar Advertising (LAMR) announced that it has formed a subsidiary - Lamar Partnering Corporation (LPCXU), a special purpose acquisition company ("SPAC") that has filed to raise $300M in an IPO. LPC plans to search for a partner at the intersection of the out-of-home advertising, technology and communications sectors. Lamar Advertising would own roughly 20% of LPC. LPC will be managed by members of Lamar’s management team, including Ross Reilly, Lamar’s Vice President of Mergers and Acquisitions and Business Analytics, who will serve as LPC’s Chief Executive Officer. The SPAC will list on Nasdaq under the ticker symbol LPCXU.





Cannabis: This evening, we'll to publish an updated sector report on Cannabis REITs on The REIT Forum. Innovative Industrial Properties (IIPR) - which has been the best-performing REIT over the past two years - has rallied in recent days after New York legalized recreational marijuana. Medical usage is now legal in 35 states while recreational usage is legal in 15 states. In addition to IIPR, we'll take a look at small-cap Power REIT (PW) and the newly-listed cannabis REIT AFC Gamma (AFCG). The ongoing federal prohibition - and the resulting limit on access to traditional banking - has forced cultivators and retailers to turn to alternative sources for capital, including cannabis REITs.

Hotels: Yesterday, we published Spring Break Is Back. Powered by Spring Break demand and accelerated by the vaccine roll-out, the recovery in domestic leisure travel - and hotel occupancy - has picked up meaningfully over the past month. TSA data showed that travel is now at 60% of pre-pandemic levels after bottoming at less than 5% while STR reported that hotel occupancy has recovered to 80% of pre-pandemic levels. Optimism for a post-pandemic recovery has sent hotel REITs surging since late-2020, but we maintain our outlook that the recovery will be uneven across market segments, and believe that suburban-focused and leisure-oriented properties will bounce far faster than urban business-focused hotels.

Mortgage REITs

Per our Mortgage REIT Tracker available to The REIT Forum subscribers, residential mREITs finished higher by 0.1% today but remain lower by -0.5% on the week. Commercial mREITs gained 0.2% today and are now flat this week. ACRES Realty (ACR) and Tremont Mortgage (TRMT) led to the upside today while Colony Credit Real Estate (CLNC) was a laggard as investors digest the impact of yesterday's announcement that it reached an agreement with Colony Capital (CLNY) to end Colony's external management agreement with the mortgage REIT, consistent with CLNC's previously announced strategic alternative review process and is consistent with Colony Capital's digital focus.

REIT Preferreds & Bonds

Per the REIT Preferreds & Bond Tracker available to The REIT Forum subscribers, REIT Preferred stocks finished higher by 0.29% today, on average, and outperformed their respective common stock issues by an average of 0.25%. So far in 2021, REIT Preferred stocks are higher by 6.79% on a price-return basis. The average REIT preferred currently pays a dividend yield of 6.29% and trades at a slight discount to par value. Over in the bond markets, Uniti Group (UNIT) announced that it will issue $570M of senior secured notes due 2028, using the proceeds to fund the redemption of outstanding 6.00% senior secured notes due 2023.

To Continue Reading, Click Here To Visit Seeking Alpha!


Join our Mailing List on our Website

The REIT Forum is now the exclusive home to Hoya Capital premium research. Visit our website and join our email list for quick access to our real estate research library: HoyaCapital.com where we have links all of our real estate sector reports and daily recaps. You can also follow our real-time commentary on Twitter, LinkedIn, and Facebook.

Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

Summary

  • U.S. equity markets rallied to fresh record-highs Monday, lifted by the reaction to the stronger-than-expected jobs report last Friday and a record-high reading on Services PMI data this morning.

  • Adding to gains of 1.2% last week, the S&P 500 finished higher by 1.4% today while the Dow Jones Industrial Average rallied 374 points. The tech-heavy Nasdaq 100 gained another.

  • Real estate equities were mixed today as the broad-based Equity REIT Index was higher by 0.4% with 9-of-19 property sectors in positive territory while the Mortgage REITs declined by 0.5%.

  • Mortgage REIT Ellington Financial (EFC) jumped nearly 5% after it boosted its dividend by 40% to $0.14/share - up from its prior dividend of $0.10. 51 equity REITs and 17 mortgage REITs have now boosted their payouts this year.

  • Net lease REIT Netstreit (NTST) gained nearly 3% today after providing a business update in which it raised its external growth target for full-year 2021. Fueled by recovering valuations and ample access to capital, net lease REITs are back in "growth mode."

Real Estate Daily Recap

U.S. equity markets rallied to fresh record-highs Monday, lifted by the reaction to the stronger-than-expected jobs report last Friday and a record-high reading on Services PMI data this morning. Adding to gains of 1.2% last week, the S&P 500 ETF (SPY) finished higher by 1.4% today while the Dow Jones Industrial Average (DJI) rallied 374 points. The tech-heavy Nasdaq 100 (QQQ) gained another 2.0%. Real estate equities were mixed today as the broad-based Equity REIT ETFs (VNQ) was higher by 0.4% with 9-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) finished lower by 0.5%.

As discussed in our Real Estate Weekly Outlook, the BLS reported last Friday - to a closed equity market - that the U.S. economy added 916k jobs in March - well above the estimates of 650k. The strong economic news continued this morning when the ISM reported that Services PMI jumped to 63.7 in March - the highest level ever for that index. Ten of the eleven GICS equity sectors were higher on the day, led to the upside by the Consumer Discretionary (XLY), Communications (XLC), and Technology (XLK) sectors.

Commercial Equity REITs

Today we published Hotel REITs: Spring Break Is Back. Powered by Spring Break demand and accelerated by the vaccine roll-out, the recovery in domestic leisure travel - and hotel occupancy - has picked up meaningfully over the past month. TSA data showed that travel is now at 60% of pre-pandemic levels after bottoming at less than 5% while STR reported that hotel occupancy has recovered to 80% of pre-pandemic levels. Optimism for a post-pandemic recovery has sent hotel REITs surging since late-2020, but we maintain our outlook that the recovery will be uneven across market segments, and believe that suburban-focused and leisure-oriented properties will bounce far faster than urban business-focused hotels.

Net Lease: Netstreit (NTST) gained 2.7% today after providing a business update in which it raised its external growth target for full-year 2021. After completing $89.5M in Q1, NTST now expects net acquisition activity of $360M for the full year, up from its previous $320M estimate. Fueled by recovering valuations and ample access to capital, several net lease REITs are back to doing what they do best as the vaccine-driven rebound "reopened the spigot" for the well-capitalized REITs at an impressive pace. Net lease REITs acquired more than $2 billion of real estate assets, on net, in the fourth quarter, a sharp acceleration following the slowdown in mid-2021 to end the year with net acquisitions of roughly $5.5 billion. Among the seven REITs that provided guidance, these REITs see acquisitions eclipsing $8 billion for 2021.

Mortgage REITs

Per our Mortgage REIT Tracker available to The REIT Forum subscribers, residential mREITs finished lower by -0.6% today after gaining 0.3% last week. Commercial mREITs declined by -0.3% today following gains of 0.2% last week. Colony Credit Real Estate (CLNC) finished lower by about 1% today after announcing that it reached an agreement with Colony Capital (CLNY) to end Colony's external management agreement with the mortgage REIT. The transaction was consistent with CLNC's previously announced strategic alternative review process and is consistent with Colony Capital's digital focus. Colony Credit expects to start operating under a new name soon after the closing of the internalization transaction.

The wave of dividend boosts continued in the mREIT sector as well today. Ellington Financial (EFC) jumped nearly 5% after it boosted its dividend by 40% to $0.14/share - up from its prior dividend of $0.10 - but still a cent below its pre-pandemic distribution rate of $0.15. Helped by 17 mREIT dividend increases this year, the average residential mREIT is currently paying a forward dividend yield of 8.1% while the average commercial mREIT is yielding 6.8%.

REIT Preferreds & Bonds

Per the REIT Preferreds & Bond Tracker available to The REIT Forum subscribers, REIT Preferred stocks finished higher by 0.17% today, on average, but underperformed their respective common stock issues by an average of 0.32%. So far in 2021, REIT Preferred stocks are higher by 6.58% on a price-return basis. The average REIT preferred currently pays a dividend yield of 6.30% and trades at a slight discount to par value.

Economic Calendar For Week Ahead

Inflation and PMI data highlight the economic calendar in the week ahead with the Services PMI report released today and the Producer Price Index report on Friday. Inflation expectations - along with longer-term Treasury Yields - have rebounded sharply since Election Day on the prospects for additional fiscal stimulus and on improving economic data, but recent inflation reports have yet to show a broad-based uptick in either consumer or producer price levels. We'll also be watching the weekly MBA Mortgage Application data on Wednesday and Jobless Claims data on Thursday.

To Continue Reading, Click Here To Visit Seeking Alpha!


Join our Mailing List on our Website

The REIT Forum is now the exclusive home to Hoya Capital premium research. Visit our website and join our email list for quick access to our real estate research library: HoyaCapital.com where we have links all of our real estate sector reports and daily recaps. You can also follow our real-time commentary on Twitter, LinkedIn, and Facebook.

Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

  • Alex Pettee, CFA
  • Powered by Spring Break demand and accelerated by the vaccine roll-out, the recovery in domestic leisure travel - and hotel occupancy - has picked up meaningfully over the past month.

  • TSA data showed that travel is now at 60% of pre-pandemic levels after bottoming at less than 5%. STR reported that hotel occupancy has recovered to 80% of pre-pandemic levels.

  • The Spring revival comes after a dark winter for hotel REITs, which reported another rough quarter in Q4. Optimism for a post-pandemic recovery has sent hotel REITs surging since late-2020.

  • We all need a vacation. While the recovery in leisure travel may be swift, business demand may take a half-decade or longer to return to pre-pandemic levels amid the "new normal" for virtualized work environments.

  • We maintain our outlook that suburban-focused and leisure-oriented properties will bounce far faster than urban business-focused hotels - markets that are also more acutely impacted by Airbnb's looming presence.

Click Here To Read The Full Report on Seeking Alpha!


Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

REIT Forum HOYA AD.png
  • Facebook Social Icon
  • Twitter Social Icon
  • LinkedIn Social Icon

Hoya Capital Real Estate, LLC

Invest@HoyaCapital.com

(833) HOYA-CAP

Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

Privacy Policy 

 Client Relationship Summary 

Hoya Capital's ADV Part 2

Important Disclosures, Definitions, & List of Holdings 

Seeking-Alpha-Logo.png

The Easy Way To Invest In Real Estate