Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Summary

  • U.S. equity markets retreated from all-time-highs today as interest rates and inflation expectations jumped to mid-pandemic highs amid a Southern 'Deep Freeze' that disrupted energy production.

  • Following gains of 1.3% last week, the S&P 500 finished lower by 0.1% today while the Dow Jones Industrial Average finished higher by 62 points.

  • Real estate equities, along with most yield-sensitive sectors, were under pressure today ahead of a jam-packed week of earnings reports as the broad-based Equity REIT ETFs finished lower by 0.8%.

  • Prison REIT GEO Group (GEO) dipped nearly 3% after reporting this morning that it expects that operations will continue to be negatively impacted from COVID-19's and from the Biden administration's shift away from private prisons.

  • Sunbelt-focused Apartment REIT NexPoint Residential (NXRT) finished higher by nearly 4% after it reported the strongest full-year revenue and NOI growth out of any of the apartment REITs to report results thus far.

Real Estate Daily Recap

U.S. equity markets retreated from all-time-highs today as interest rates and inflation expectations jumped to mid-pandemic highs amid a Southern 'Deep Freeze' that disrupted energy production. Following gains of 1.3% last week, the S&P 500 ETF (SPY) finished lower by 0.1% today while the Dow Jones Industrial Average (DIA) finished higher by 62 points. Real estate equities, along with most yield-sensitive sectors, were under pressure today ahead of a jam-packed week of REIT earnings reports as the broad-based Equity REIT ETFs (VNQ) finished lower by 0.8% with 15-of-19 property sectors in negative territory while the Mortgage REIT ETFs (REM) gained 1.7%.

Eight of the eleven GICS equity sectors finished in negative territory today, led to the downside by the yield-sensitive Utilities (XLU) and Real Estate (XLRE) sectors after the 10-Year Treasury Yield (IEF) jumped 10 basis points, closing at 1.30% as surging energy prices pushed inflation expectations to the highest levels since last March. Bitcoin (BTC-USD), which has become an "inflation proxy" of sorts, was also back in the headlines today after trading above 50,000 for the first time. As discussed in our Real Estate Weekly Outlook, U.S. equity markets entered the week at all-time-highs, propelled by a historically strong slate of corporate earnings, encouraging coronavirus trends, and economic data showing muted inflationary pressure in early 2021.

In addition to the frenetic week of earnings, we have a jam-packed slate of economic data in the holiday-shortened week ahead. On Wednesday, we'll see NAHB Homebuilder Sentiment data, the BLS Retail Sales report, and Producer Price Index data. On Thursday, we'll see Housing Starts and Building Permits for January which are expected to moderate slightly after reaching 12-year highs in late 2020. Then on Friday, we'll see Existing Home Sales for January as well as Manufacturing and Services PMI data. As usual, we'll also be watching the weekly Mortgage Applications and Jobless Claims data as well on Wednesday and Thursday, respectively.


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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 closed the week at record-highs Friday, propelled by a solid slate of corporate earnings, encouraging coronavirus trends, and economic data suggesting a "Goldilocks" environment of muted inflation.

  • Ending the week with gains of roughly 1.3%, the S&P 500 finished higher by 0.5% today while the Dow Jones Industrial Average finished higher by 28 points.

  • Real estate equities were mixed today following a jam-packed week of REIT earnings reports as the broad-based Equity REIT ETFs finished flat with 11-of-19 property sectors in positive territory.

  • This week saw some of the lowest-levels of intra-day stock market volatility in recent history as the Volatility Index (VIX) fell to the lowest level since before the pandemic.

  • More than four dozen REITs reported results this week while 8 REITs increased their dividends. We'll publish a full analysis of this week's developments in the real estate industry in our Real Estate Weekly Outlook published on Saturday morning.

Real Estate Daily Recap

U.S. equity markets closed the week at record-highs Friday, propelled by a solid slate of corporate earnings, encouraging coronavirus trends, and economic data suggesting a "Goldilocks" environment of muted inflation. Ending the week with gains of roughly 1.3%, the S&P 500 ETF (SPY) finished higher by 0.5% today while the Dow Jones Industrial Average (DIA) finished higher by 28 points. Real estate equities were mixed today following a jam-packed week of REIT earnings reports as the broad-based Equity REIT ETFs (VNQ) finished flat with 11-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) gained 0.7%.

Following the short-squeeze excitement earlier this month, this week saw some of the lowest-levels of stock market volatility in recent history as the Volatility Index (VIX) fell to the lowest level since before the pandemic. Nine of the eleven GICS equity sectors finished on higher today, led to the upside by the economically-sensitive Energy (XLE), Materials (XLB), and Financials (XLF) sectors. Homebuilders and the broader Hoya Capital Housing Index also took a breather today ahead of the unofficial start to home buying season: Presidents Day Weekend. We'll publish a full analysis of this week's developments in the real estate industry in our Real Estate Weekly Outlook published on Saturday morning.

Real Estate Earnings Update

Today we published REIT Earnings Halftime Report: Dividend Revival. We're now at the halfway point of another newsworthy REIT earnings season. Results thus far have generally been better than expected as dividend cuts have given way to dividend boosts. 18 equity REITs have now boosted their dividend this year, the majority of which were among the 52 REITs that increased their dividend last year. Rent collection - and interest collection for mREITs - has recovered to "normalized" levels across all major property sectors outside of retail. Mall REITs continue to report difficulty collecting rents. The back half of earnings season could bring more fireworks, however, as many of the more-troubled REITs have yet to report results.

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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
  • We're now at the halfway point of another newsworthy REIT earnings season. Results thus far have generally been better than expected as dividend cuts have given way to dividend boosts.

  • Rents paid, dividends raised: 18 equity REITs have boosted their dividend this year, the majority of which were among the 52 REITs that increased their dividend last year.

  • Rent collection - and interest collection for mREITs - has recovered to "normalized" levels across all major property sectors outside of retail. Mall REITs continue to report difficulty collecting rents.

  • The "essential" property sectors - housing, technology, and logistics - have continued to build on their momentum. The "urban exodus" and "suburban revival" continue to be major themes in Q4 results.

  • Industrial REITs, sunbelt-focused apartment REITs, and homebuilders have been the positive standouts. The back half of earnings season could bring more fireworks, however, as many of the more-troubled REITs have yet to report results.

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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.

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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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