Real Estate Earnings Recap: Housing REITs Lead Recovery
Following several years of floundering stock price performance, REITs have outperformed in 2019, boosted by receding interest rates and strengthening property-level fundamentals.
Residential REITs have led the recovery this year as an intensifying housing shortage has reignited rent growth, a result of strong household formations and slowing new construction.
The 'REIT Rejuvenation' has restored the coveted NAV premium, giving these REITs the currency to re-open the acquisition pipeline which had essentially shut down since 2017.
First-quarter earnings results were generally better-than-expected across most real estate sectors. Retail REITs, however, continue to struggle with a seemingly endless wave of store closings.
As counterintuitive as it may be, we explain that elevated valuations are welcome news for REITs. We analyze REIT fundamental data from the recently released NAREIT T-Tracker data.