• Alex Pettee, CFA

Built-To-Rent Boom • REIT Dividend Hike • Preferred Payout

Summary

  • U.S. equity markets were mixed Tuesday as technology and other "stay at home" stocks lagged for the second-straight session while investors rotated into more economically-sensitive sectors.

  • Energy traders balked at the Biden Administration's plan to ease soaring gasoline prices by tapping the strategic oil reserve as Crude Oil prices soared more than 3% today.

  • Small-cap net lease REIT Alpine Income Property Trust (PINE) hiked its dividend for the third time this year, declaring a $0.27/share quarterly dividend, a 5.9% increase from its prior dividend.

  • Tricon American (TCN) - the fourth-largest owner of single-family homes in the United States - announced today that it now has 3,000 additional rental units in its construction pipeline through its partnerships with home builders.

  • Hotel REIT Ashford Hospitality (AHT) announced this morning that it will get current on its accrued preferred dividends after having deferred cumulative payments over the past six quarters.

Income Builder Daily Recap

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U.S. equity markets were mixed Tuesday as technology and other "stay at home" stocks lagged for the second-straight session while investors rotated into more economically-sensitive sectors. Following declines of 0.3% yesterday, the S&P 500 finished higher by 0.1% today while the Mid-Cap 400 declined 0.1% and the Small-Cap 600 finished flat. Real estate equities were among the leaders today with residential REITs leading to the upside as the Equity REIT Index advanced 0.9% today with 15-of-19 property sectors in positive territory while Mortgage REITs gained 0.3%.

Energy traders balked at the Biden Administration's plan to ease soaring gasoline prices by tapping the strategic oil reserve as Crude Oil prices soared more than 3% today while Gasoline futures gained more than 4%. The 10-Year Treasury Yield advanced another 4 basis points to 1.67%, now higher by 13 basis points this week as investors priced in a higher certainty of at least one Fed Funds rate increase by the middle of 2022. Homebuilders and the broader Hoya Capital Housing Index were also among the leaders today ahead of New Home Sales data tomorrow morning.

Equity REIT Daily Recap

Net Lease: After the close yesterday, small-cap net lease REIT Alpine Income Property Trust (PINE) hiked its dividend for the third time this year, declaring a $0.27/share quarterly dividend, a 5.9% increase from its prior dividend of $0.26. In our State of the REIT Nation report published today, we discussed how despite the 120 REIT dividend increases this year, the third quarter total was still 20% below the pre-pandemic third quarter of 2019. With FFO growth significantly outpacing dividend growth, REIT dividend payout ratios remained at just 67% in Q3, indicating that REITs are well equipped to continue to raise their payouts in the quarters ahead.

Single-Family Rentals: Tricon American (TCN) - which is the fourth-largest owner of single-family homes in the United States - announced today that it now has 3,000 additional rental units in its construction pipeline through its partnerships with home builders. We've discussed how we expect SFR REITs and other institutional SFR operators to account for a growing share of new home purchases direct from the homebuilders themselves. The communities are under development in Tricon's existing single-family rental investment vehicles THPAS-JV1 and Homebuilder Direct JV, and are being built by a number of national and regional homebuilders including four of the top 25 largest homebuilders in the United States.

Industrial: Yesterday we published Empty Shelves, Ample Opportunity - which discussed how the red-hot industrial property market - "ground zero" of supply-chain shortages - continues to ride a historic demand-supply imbalance as businesses scramble to build out supply resiliency. Industrial REITs - which recorded the strongest dividend and FFO growth of any real estate sector in 2020 - continue to thrive amid "extreme competition" for logistics and distribution space. Logistics REITs surely aren't cheap, but absent significant efficiency gains in warehouse utilization, the secular tailwinds of limited supply and robust demand should persist into the back half of this decade.

Mortgage REIT Daily Recap

Per the REIT Rankings Tracker available to Income Builder subscribers, residential mREITs gained 0.3% today while commercial mREITs ended flat. Granite Point Mortgage (GMPT) priced its first exchange-traded preferred issue - a 7.00% Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock with a $25/share liquidation preference, which it will list on the NYSE under symbol GMPT PrA. Net proceeds will be used for the partial repayment of its 8.00% senior secured term loan facility.

REIT Preferreds & Capital Raising

Per the REIT Preferred Tracker available to Income Builder subscribers, REIT Preferreds slipped 0.22% today, on average, but remain higher by 9.30% on a price-return basis with total returns of roughly 14%. Hotel REIT Ashford Hospitality (AHT) announced this morning that it will get current on its accrued preferred dividends after having deferred cumulative payments over the past six quarters. AHT, which has reported improving operating metrics, was one of a small handful of REITs that had their preferred distributions suspended. (Hotel REIT SOHO and Mall REIT PEI are the others).

Income Builder Trending Reports

Below we highlight several of the most-read reports over the last 24 hours published by the Income Builder contributor team.

Economic Data This Week

We have another busy week of economic data and housing data in the Thanksgiving-shortened week ahead. Following better-than-expected Existing Home Sales data on Monday, we'll see New Home Sales data on Wednesday, which is expected to be similarly strong at 800K. Also on Wednesday, we'll see inflation data with the PCE Price Index - the Fed's "preferred" measure of inflation - which is expected to show that consumer prices are rising at the highest level in over three decades. We'll also be watching a flurry of Purchasing Managers Index ("PMI") data throughout the week and the second look at Consumer Sentiment data for November.



We're excited to announce the launch of our new investment research service here on Seeking Alpha - Hoya Capital Income Builder. We've put together a great team of contributors from across the REIT, dividend, and ETF industry, so whether your focus is High Yield or Dividend Growth, we’ve got you covered with high-quality, actionable investment research and a comprehensive suite of tools and models to help build sustainable portfolio income targeting premium dividend yields of up to 10%. And of course, subscribers receive complete access to our investment research - including reports that are never published elsewhere - from Hoya Capital and our team of contributors.

Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

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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