Dividend Cuts And Overdue Rent: REIT Earnings Recap
Updated: Sep 19, 2020
Did the rent get paid? Rent collection and dividend cuts were the primary themes of the most newsworthy and consequential REIT earnings season since the Great Financial Crisis.
Rent collection was largely a non-issue for residential REITs, who collected over 95% of April rents. Industrial, office, self-storage, and healthcare rent collection metrics were similarly strong.
Economic shutdowns ravaged the economically-sensitive property sectors and punished highly-levered REITs. 50 equity REITs - primarily retail and lodging REITs - announced a cut or suspension of their dividends.
2020 was poised to be a solid year of growth for REITs prior to the pandemic. Even with a faster-than-expected reopening, fundamental metrics are likely to be the weakest since at least 2009.
Equity and Mortgage REITs have rebounded significantly in recent weeks, but sector-level selectivity remains especially critical. "Essential" sectors like residential, industrial, and technology will bifurcate from troubled sectors.