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  • Alex Pettee, CFA

REIT Earnings Recap: Inflation Overshadows Strong Quarter

  • Overshadowed by concerns about rising inflation, a frenzy of real estate earnings reports over the last month has provided critical information on the state of the real estate industry.

  • Results were better than expected across most major property sectors with roughly 80% of the 170 equity REITs and 40 mortgage REITs in our coverage universe beating consensus FFO estimates.

  • Positive surprises were primarily in the residential sectors where self-storage, manufactured housing, and sunbelt-focused single-family and multifamily REITs saw accelerating rent growth.

  • Across the equity market - and particularly within the REIT sector - two macroeconomic trends have set the course in early 2021: 1) The post-vaccine sector rotation, and 2) Concerns over rising interest rates and inflation.

  • Historical trends indicate that REITs, as a whole, have performed quite well during periods of rising interest rates and inflation, and that commercial and residential real estate have historically exhibited moderate-to-strong inflation-hedging properties.

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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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Hoya Capital Research & Index Innovations is an affiliated index provider and research firm that builds custom indexes tracking U.S. commercial and residential real estate sectors, including indexes tracked by exchange-traded funds (ETFs). 

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