• Alex Pettee, CFA

REITs Lead On Choppy Week

Summary

  • U.S. equity markets continued to slump Friday on data showing that Consumer Sentiment remained near decade-lows for the second-straight month amid ongoing concerns over inflation and COVID restrictions.

  • Declining for the eighth time in the past ten sessions, the S&P 500 slipped 1.0% today while the Mid-Cap 400 declined by 0.9% and the Small-Cap 600 fell 0.5%.

  • Real estate equities were mixed today - but were among the leaders for the week - as the Equity REIT Index declined 0.9% today with 16-of-19 property sectors in negative territory.

  • The wave of REIT dividend hikes continued over the last 24 hours as another three REITs boosted their payouts, bringing the full-year total to 105. American Tower (AMT), Tanger Outlets (SKT), and WP Carey (WPC) each raised their payouts.

  • We'll publish a full analysis and commentary of this week's developments in the real estate industry, as well as an analysis of the busy week of economic data in our Real Estate Weekly Outlook report on Saturday morning.

Real Estate Daily Recap

U.S. equity markets continued to slump Friday on data showing that Consumer Sentiment remained near decade-lows for the second-straight month amid ongoing concerns over inflation and COVID restrictions. Declining for the eighth time in the past ten sessions and declining by roughly 1% for the week, the S&P 500 slipped 1.0% today while the Mid-Cap 400 declined by 0.9% and the Small-Cap 600 fell 0.5%. Real estate equities were mixed today - but were among the leaders for the week following a wave of dividend hikes - as the Equity REIT Index declined 0.9% today with 16-of-19 property sectors in negative territory while Mortgage REITs were flat.

All eleven GICS equity sectors were lower on the day, dragged on the downside by the Materials (XLB), Technology (XLK), and Utilities (XLU) sectors. Homebuilders and the broader Hoya Capital Housing Index were among the leaders today and on the week as data from Redfin (RDFN) and ReMax (RMAX) this week each indicated continued strength behind the broader housing industry despite historically low housing supply. We'll publish a full analysis and commentary of this week's developments in the real estate industry, as well as an analysis of the busy week of economic data in our Real Estate Weekly Outlook report on Saturday morning.

Equity REITs

The wave of REIT dividend hikes continued over the last 24 hours as another three REITs boosted their payouts, bringing the full-year total to 105. Retail REIT Tanger Factory Outlets (SKT) was among the leaders today after it boosted its quarterly dividend by 2.8% to $0.1825/share, representing a forward yield of roughly 4.2%. Net lease REIT W. P. Carey (WPC) was also among the leaders after raising its quarterly dividend for the third time this year to $1.052/share, representing a forward yield of roughly 5.5%. Cell tower REIT American Tower (AMT) - the largest REIT by market cap - was lower today despite boosting its dividend for the third time this year - this time by 3.1% to $1.31/share - representing a forward yield of 1.7%.

Mortgage REITs

Per our Mortgage REIT Tracker, residential mREITs finished higher by 0.2% to push their weekly gains to 1.1%. Commercial mREITs slipped 0.2% today but remained higher by 1.1% on the week. Ahead of its upcoming merger with Benefit Street expected to close later this year, Capstead Mortgage (CMO) declared a $0.0725/share quarterly dividend, down from its prior dividend of $0.15. The combined company - to be called “Franklin BSP Realty Trust - will be externally managed by Benefit Street Partners, a subsidiary of Franklin Templeton and will trade on the NYSE under the new ticker symbol FBRT. Also today, Orchid Island Capital (ORC) declared a $0.065/share monthly dividend, in line with its previous rate. The average residential mortgage REIT now pays a dividend yield of 9.0% while the average commercial mortgage REIT pays a dividend yield of 6.9%.

REIT Preferreds & Capital Raising

Per the REIT Preferreds & Bond Tracker available to The REIT Forum subscribers, REIT Preferred stocks finished higher 0.03% today, on average, and outperformed their respective common stock issues by an average of 0.24%. So far in 2021, REIT Preferred stocks are higher by 11.23% on a price return basis. The average REIT preferred pays a current yield of 5.94% and trades at a slight premium to par value. Over in the bond markets today, American Tower (AMT) announced that it will redeem its 4.70% senior unsecured notes due 2022 on Oct. 18.

Economic Data This Week

We'll publish a full analysis and commentary of this week's developments in the real estate industry, as well as an analysis of the busy week of economic data in our Real Estate Weekly Outlook report on Saturday morning.

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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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