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  • Alex Pettee, CFA

REITs Lead • Simon's SPAC • Week Ahead

Summary

  • U.S. equity markets were little changed Monday as investors await a jam-packed slate of economic data this week, as well as the beginning of first-quarter earnings season.

  • Following strong gains of 2.7% last week, the S&P 500 finished fractionally lower on the day while the Mid-Cap 400 and Small-Cap 600 indexes gained 0.3% and 0.1%, respectively.

  • Real estate equities were among the leaders today as the broad-based Equity REIT Index finished higher by 0.6% with 16-of-19 property sectors in positive territory while Mortgage REITs gained 0.6%.

  • SPG Acquisition Holdings (SPGS) - the SPAC sponsored by Simon Property (SPG) announced the separate trading of its Class A Common Stock and Warrants, commencing today.

  • Major economic data releases this week include the CPI Index inflation report on Tuesday, Retail Sales and Homebuilder Sentiment data on Thursday, and Housing Starts and Building Permits on Friday.

Real Estate Daily Recap

U.S. equity markets were little changed Monday as investors await a jam-packed slate of economic data this week, as well as the beginning of first-quarter earnings season. Following strong gains of 2.7% last week, the S&P 500 ETF (SPY) finished fractionally lower on the day while the Mid-Cap 400 (MDY) and Small-Cap 600 (SLY) indexes gained 0.3% and 0.1%, respectively. Real estate equities were among the leaders today as the broad-based Equity REIT ETFs (VNQ) finished higher by 0.6% with 16-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) finished higher by 0.6%.

As discussed in our Real Estate Weekly Outlook, trading volumes have been light in recent weeks but certainly may rebound this week ahead of the closely-watched CPI inflation report tomorrow morning. Eight of the eleven GICS equity sectors were higher on the day, led to the upside by the Consumer Discretionary (XLY) and Commerical Real Estate (XLRE) sectors while large-cap technology stocks lagged. Home improvement retailers, residential REITs and the broader Hoya Capital Housing Index delivered a strong day ahead of a busy slate of housing data throughout the week.

On that point, the economic calendar heats up tomorrow morning when we'll see Consumer Price Index data for March which is expected to mirror the jump seen in producer prices this past week. On Thursday, we'll see Retail Sales data for March should see a sizable boost from stimulus checks which arrived in bank accounts in the middle of last month. Also on Thursday, we'll see NAHB Homebuilder Sentiment data which is expected to remain near historically high levels. Finally, on Friday, we'll see Building Permits and Housing Starts as well as Consumer Sentiment data.

Commercial Equity REITs

SPAC Mania: SPG Acquisition Holdings (SPGS) - the SPAC sponsored by Simon Property (SPG) announced the separate trading of its Class A Common Stock and Warrants, commencing today. SPG plans to target "innovative businesses that operate in the 'Live, Work, Play, Stay, Shop' ecosystem."Last week, billboard REIT Lamar Advertising (LAMR) joining a wave of other real estate SPACs this year after it announced that it formed a subsidiary - Lamar Partnering Corporation (LPCXU), a special purpose acquisition company ("SPAC") that has filed to raise $300M in an IPO. LPC plans to search for a partner "at the intersection of the out-of-home advertising, technology, and communications sectors."

Mortgage REITs

Per our Mortgage REIT Tracker available to The REIT Forum subscribers, residential mREITs finished higher by 0.4% today after ending last week lower by 0.5%. Commercial mREITs gained 0.9% today, extending its 0.5% gains from last week. KKR Real Estate (KREF) was among the leaders today after it announced last Friday afternoon the launch of a 6.50% Series A Cumulative Redeemable Preferred Stock at $25.00 per share which will trade on the NYSE under the ticker symbol “KREF PRA.”

REIT Preferreds & Bonds

Per the REIT Preferreds & Bond Tracker available to The REIT Forum subscribers, REIT Preferred stocks finished higher by 0.03% today, on average, and outperformed their respective common stock issues by an average of 0.12%. So far in 2021, REIT Preferred stocks are higher by 6.66% on a price-return basis and the average REIT preferred currently pays a dividend yield of 6.29% and trades at a slight discount to par value.


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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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