• Alex Pettee, CFA

Fresh Records • Volatility Vanishes • REIT Earnings Updates

Summary

  • U.S. equity markets closed the week at record-highs Friday, propelled by a solid slate of corporate earnings, encouraging coronavirus trends, and economic data suggesting a "Goldilocks" environment of muted inflation.

  • Ending the week with gains of roughly 1.3%, the S&P 500 finished higher by 0.5% today while the Dow Jones Industrial Average finished higher by 28 points.

  • Real estate equities were mixed today following a jam-packed week of REIT earnings reports as the broad-based Equity REIT ETFs finished flat with 11-of-19 property sectors in positive territory.

  • This week saw some of the lowest-levels of intra-day stock market volatility in recent history as the Volatility Index (VIX) fell to the lowest level since before the pandemic.

  • More than four dozen REITs reported results this week while 8 REITs increased their dividends. We'll publish a full analysis of this week's developments in the real estate industry in our Real Estate Weekly Outlook published on Saturday morning.

Real Estate Daily Recap

U.S. equity markets closed the week at record-highs Friday, propelled by a solid slate of corporate earnings, encouraging coronavirus trends, and economic data suggesting a "Goldilocks" environment of muted inflation. Ending the week with gains of roughly 1.3%, the S&P 500 ETF (SPY) finished higher by 0.5% today while the Dow Jones Industrial Average (DIA) finished higher by 28 points. Real estate equities were mixed today following a jam-packed week of REIT earnings reports as the broad-based Equity REIT ETFs (VNQ) finished flat with 11-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) gained 0.7%.

Following the short-squeeze excitement earlier this month, this week saw some of the lowest-levels of stock market volatility in recent history as the Volatility Index (VIX) fell to the lowest level since before the pandemic. Nine of the eleven GICS equity sectors finished on higher today, led to the upside by the economically-sensitive Energy (XLE), Materials (XLB), and Financials (XLF) sectors. Homebuilders and the broader Hoya Capital Housing Index also took a breather today ahead of the unofficial start to home buying season: Presidents Day Weekend. We'll publish a full analysis of this week's developments in the real estate industry in our Real Estate Weekly Outlook published on Saturday morning.

Real Estate Earnings Update

Today we published REIT Earnings Halftime Report: Dividend Revival. We're now at the halfway point of another newsworthy REIT earnings season. Results thus far have generally been better than expected as dividend cuts have given way to dividend boosts. 18 equity REITs have now boosted their dividend this year, the majority of which were among the 52 REITs that increased their dividend last year. Rent collection - and interest collection for mREITs - has recovered to "normalized" levels across all major property sectors outside of retail. Mall REITs continue to report difficulty collecting rents. The back half of earnings season could bring more fireworks, however, as many of the more-troubled REITs have yet to report results.

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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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