Alex Pettee, CFA
Mergers And Earnings Lift REITs
The U.S. equity market rally stalled this past week as intensifying COVID issues in India and domestic inflationary concerns offset a stellar slate of corporate earnings reports and economic data.
The S&P 500 edged out gains of 0.1% - notching gains in five of the past six weeks - but the Mid-Cap 400 pulled back 0.7% and the Small-Cap 600 declined 0.5%.
Real estate equities were among the leaders amid a frenetic week of M&A news and impressive earnings reports. The Equity REIT Index gained 1.3% with 16 of 19 property sectors in positive territory.
The animal spirits are alive in REIT world. Realty Income announced that it will acquire Vereit in an all-stock deal to form a massive net lease REIT that will have a combined enterprise value of about $50B.
"Beat and Boost" has been the theme of REIT earnings season. Residential and storage REITs have reported stellar results as robust housing demand and surging home values have reignited rent growth.
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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.