REIT Earnings • Dividend Hikes • Cap Rates Rise

February 9, 2023 | Hoya Capital

REIT Earnings • Dividend Hikes • Cap Rates Rise Real Estate Daily Recap Feb 9 Written By U.S. equity markets finished lower Thursday - reiterating from early-session gains and closing near session lows - as hawkish comments from Fed officials and mixed corporate earnings results weighed on sentiment. Extending its weekly decline to roughly 1.5%, the S&P 500 slipped 0.9% while the Mid-Cap 400 and Small-Cap 600 pushed their weekly declines to nearly 3% and 4%, respectively.

Real estate equities were also under pressure today as investors analyzed a busy slate of REIT earning results. Equity REITs declined 1.1% while Mortgage REITs dipped 3.1%. Apartment REIT AvalonBay (AVB) traded roughly flat today after hiking its quarterly dividend by 4% to $1.65/share - its first dividend increase since 2019. AVB forecasts rental revenue growth of 5.0% in 2023, driven primarily by renewal rent growth with strength from Northeast markets offsetting relative weakness in its California markets.

Net Lease REIT National Retail (NNN) declined about 2% today after kicking-off net lease earnings season with an in-line report. Notably, NNN's acquisition cap rate of 6.6% in Q4 was only 10 basis points above its 6.5% cap rate in Q4 of 2021 during which time the 10-Year Treasury Yield increased by 230 basis points. Income Builder Daily Recap U.S. equity markets finished lower Thursday - reiterating from early-session gains and closing near session lows - as hawkish comments from Fed officials and mixed corporate earnings results weighed on sentiment.

Extending its weekly decline to roughly 1.5%, the S&P 500 slipped 0.9% today while the Mid-Cap 400 and Small-Cap 600 pushed their weekly declines to 3% and 4%, respectively. The Dow slipped 249 points. Treasury yields resumed their climb after yesterday's pause with the 10-Year Treasury Yield climbing back to its highest levels since January 5th at 3.68%. Real estate equities were also under pressure today as investors analyzed a busy slate of REIT earning ...