Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Daily Recap: REITs Climb Despite CBL Implosion

US equity markets fell for the third straight day after a series of back-and-forth comments between the U.S. and China called into question the likelihood of a trade deal between the two largest economies ahead of the December 15 tariffs. The S&P 500 ETF (SPY) declined 0.7% while the Nasdaq ETF (QQQ) fell 0.8%, but each closed near their session highs. The 10-Year Treasury Yield (IEF) retreated by 12 basis points on the day to end at 1.71%, matching the lowest closing level since late October. The domestic-focused and yield-senstive equity sectors generally outperformed with the broad-based Real Estate ETF (VNQ) gaining 0.6% on the day. 

Led by the cell tower and storage REIT sectors, thirteen of the fifteen real estate sectors finished the day in positive territory. Mall REITs lagged after high-yielding CBL & Associates (CBL) suspended its dividend on both common and preferred stocks, sending the common stock lower by 25% and slashing half the value from the preferred equities. In our latest report on the mall sector, Mall REITs: Do Or Die Time, we noted that, "the three low-productivity mall REITs [CBL, WPG, PEI] will continue to teeter on the edge of relevancy and believe that a sizable chunk of their malls is a recession away from extinction, highlighting the need for investors to be highly selective in their real estate allocation decisions."

Led by strong performance from the residential REIT sector, the Hoya Capital Housing Index, the benchmark that tracks the performance of the US housing industry, outperformed the broader indexes but still finished the day marginally lower. Senior housing REIT HealthPeak (PEAK), and self-storage REITs ExtraSpace (EXR), Public Storage (NYSE:PSA), and CubeSmart (CUBE) were among the best-performing REITs on the day. Aside from the residential REITs, Redfin (RDFN), Simpson (SSD), and KB Home (KBH) were all higher by at least 1.5% on the day. 

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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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