REITs Retreat Amid Reopening Resistance

May 16, 2020 | Hoya Capital

REITs Retreat Amid Reopening Resistance Weekly Recap May 16 Written By U.S. equity markets reversed last week's gains after Congressional leaders and Federal officials pushed back on plans to end government-mandated lockdowns despite an unprecedented surge in joblessness. Jobless Claims data this week showed that one-fifth of the American workforce is now unemployed, at least temporarily, while Retail Sales data showed a historic plunge as the "retail-casualties" mount. The momentum faded this week for real estate equities after two weeks of solid gains amid a generally stronger-than-expected earnings season in which most REITs reported strong rent collection metrics.

Nearly a third of the equity REIT sector and the vast majority of mortgage REITs have suspended or reduced their dividend since the start of the pandemic as some small-cap retail and hotel REITs are in a fight for survival. There were glimmers of strength amid an otherwise bleak slate of economic data. Redfin noted that home-buying demand has "come roaring back" and is now 5.5% higher than it was pre-pandemic.

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