Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA
  • Tech Trouble? Cell Tower REITs outperformed the REIT Index for the sixth-straight-year in 2020, but have dipped nearly 20% over the last quarter amid the sharp vaccine-driven REIT sector rotation.

  • 5G Is Here. Apple's successful iPhone 12 launch represents the true "arrival" of 5G, the much-anticipated next-generation mobile network will reach its full potential as post-pandemic mobility rates normalize.

  • All three cell tower REITs boosted their dividends in 2020. Cell Tower REITs have recorded annual dividend growth averaging 26% over the past 5 years, the tops among major REIT sectors.

  • Cell Tower REITs continue to benefit from highly favorable competitive positioning within the telecommunication sector and, despite the recent sell-off, little has changed over the past quarter to alter that outlook.

  • The pull-back appears to be a long-awaited buying opportunity. Despite sector-leading growth rates, cell tower REITs - along with many other "essential" REITs in the housing, technology, and logistics sectors - trade near historically low relative valuations to the REIT average.

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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 retreated Monday, dragged on the downside by mega-cap technology companies amid reignited regulatory concerns following the de-platforming of President Trump and other conservative media outlets.

  • After gaining 2.0% last week, the S&P 500 finished lower by 0.7% while the Dow Jones Industrial Average declined 89 points and the Nasdaq 100 dipped 1.5%.

  • Following a disappointing start to 2021 last week, real estate equities were again laggards today as the Equity REIT ETF declined by 1.3% with 18 of 19 property sectors in negative-territory.

  • Twitter and Facebook plunged as the social media companies stepped into the center of the intensifying debate over monopoly power, censorship, free speech, and corporate influence in politics.

  • Two REITs - STAG and BRMK- boosted their dividends this afternoon. Inflation data highlights this week's economic calendar. Inflation expectations surged last week after Democrats won the "trifecta" of political control.

Real Estate Daily Recap

U.S. equity markets retreated Monday, dragged on the downside by mega-cap technology companies amid reignited regulatory concerns following the de-platforming of President Trump and other conservative-leaning media outlets. After gaining 2.0% last week, the S&P 500 ETF (SPY) finished lower by 0.7% while the Dow Jones Industrial Average (DIA) declined 89 points and the Nasdaq 100 (QQQ) dipped 1.5%. Following a disappointing start to 2021 last week, real estate equities were again laggards today as the broad-based Equity REIT ETF (VNQ) declined by 1.3% with 18 of 19 property sectors in negative territory while Mortgage REITs (REM) retreated by 0.9%.

Seven of the eleven GICS equity sectors finished lower on the day, led to the downside by the Consumer Discretionary (XLY) and Communications (XLC) sectors while the Energy (XLE) added to last week's rally on the upside. Homebuilders and the broader Hoya Capital Housing Index were also leaders on the upside. Twitter (TWTR) plunged more than 6% while Facebook (FB) and Amazon (AMZN) were also under pressure social media companies and tech platforms stepped into the center of the intensifying debate over monopoly power, censorship, free speech, and corporate influence in politics. Bitcoin (BTC-USD), an emerging proxy for inflation expectations, dipped more than 10% on the day after climbing to record-highs last week.

After a jam-packed week of employment data, it will be another busy week of economic data in the week ahead headlined by the two major inflation reports. On Wednesday, we'll see Consumer Price Index data for December, and on Friday, we'll see Producer Price Index data. Inflation expectations surged last week after Democrats won the "trifecta" of political control given the implications for additional stimulus, and investors will be looking for signs of inflation in the hard data in the months ahead. We'll also see Retail Sales data for December on Friday. As usual, we'll also be watching the weekly Mortgage Applications and Jobless Claims as well.

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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
  • U.S. equity markets finished broadly higher on the first week of 2021 despite partisan tensions flaring following the Georgia runoff elections in which Democrats gained a "trifecta" of political control.

  • After finishing 2020 with total returns of 18.4%, the S&P 500 jumped 2.0%. The large-cap index, however, was outpaced by Mid-Caps and Small-Caps, which surged 4.8% and 6.4%, respectively.

  • With additional stimulus likely high on the political docket for the incoming Biden administration, rising inflation expectations sent Treasury yields surging to post-pandemic highs, pressuring the yield-sensitive REIT sector.

  • It was a busy week of REIT-related news flow. Life Storage became the first REIT to boost its dividend in 2021. Q4 rent collection updates ranged from 99% to a low of 46%, underscoring the continued bifurcation.

  • The U.S. economy lost 140k jobs in December - the first month of job declines since April - as the employment rebound reversed amid the "third wave" of coronavirus-induced economic shutdowns.

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.

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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.

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