Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Apartment REITs: Tale Of Two Americas

  • Best of times or worst of times? Apartment REITs have a front-row seat to the burgeoning economic divide as the "urban exodus" continues to add fuel to the "suburban renaissance."

  • While vaccines may eventually reverse recent dynamics, rental rates and occupancy levels have plunged in the high-density, coastal "shutdown cities" that employed more draconian lockdown measures.

  • Meanwhile, Apartment REITs focused on Sunbelt and suburban markets delivered a solid year of FFO and NOI growth in 2020, and rental rates continue to trend higher in early 2021.

  • Outside of the troubled urban metros, national apartment markets have been remarkably resilient throughout the pandemic. Apartment REITs' exposure to the troubled markets is more limited than valuations suggest.

  • With gains of nearly 15% this year, apartment REITs aren't as cheap as they were in late 2020, but valuations still appear compelling as the U.S. housing industry continues to lead the early economic recovery.

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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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