Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

REITs Rally • Mall Earnings • More Dividend Increases

Summary

  • U.S. equity markets rallied to fresh record-highs on Friday after inflation data failed to show a meaningful uptick in producer prices while investors digest the impacts of the $1.9 trillion stimulus package.

  • Ending the week at record-highs with gains of nearly 3%, the S&P 500 finished higher by 0.1% while the tech-heavy Nasdaq 100 pulled back by 0.8% on a volatile week.

  • A strong day by housing REITs led the real estate sector to broad-based gains as the Equity REIT ETFs finished higher by 1.7% with all 19 property sectors in positive-territory.

  • Two more equity REITs raised their dividends over the last 24 hours: industrial REIT Americold (COLD) and net lease REIT WP Carey (WPC). We've now seen 42 equity REITs raise their dividends so far this year.

  • Pennsylvania REIT (PEI) - which emerged from Chapter 11 bankruptcy in December - reported that its FFO dipped into negative territory for full-year 2020 while its Same Store NOI was lower by a sector-worst -28.2%.

Real Estate Daily Recap

U.S. equity markets rallied to fresh record-highs on Friday after inflation data failed to show a meaningful uptick in producer prices while investors digest the impacts of the massive $1.9 trillion stimulus package signed yesterday. Ending the week at record-highs with gains of nearly 3%, the S&P 500 ETF (SPY) finished higher by 0.1% while the tech-heavy Nasdaq 100 (QQQ) pulled back 0.8% on another volatile week for large-cap tech. A strong day by Residential REITs led the real estate sector to broad-based gains as the Equity REIT ETFs (VNQ) finished higher by 1.7% with all 19 property sectors in positive territory while the Mortgage REIT ETFs (REM) gained 1.0%.

Nine of the eleven GICS equity sectors finished in positive territory today while all eleven were higher on the week. The strong week for REITs - which rallied more than 5% - pushed their YTD gains back above the S&P 500 and came despite another jump in the 10-Year Treasury Yield (IEF), which closed at 1.64%, the highest since before the pandemic. Despite pressure on the homebuilders today, housing financials and home improvement firms were broadly higher today, lifting the Hoya Capital Housing Index to fresh records as well ahead of a busy week of housing data in the week ahead.

Inflation data was a focus this past week after the passage of another historically-large $1.9 trillion fiscal stimulus package this week. Following CPI report earlier this week which showed muted pressure on core consumer prices in February, the Producer Price Index report this morning showed a similar trend. Core producer prices rose less than expected in February but still pushed its annual rise to 2.52%, which was the highest since mid-2019. 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.

Commercial Equity REITs

Consistent with the trends discussed earlier this week in Dividends Raised, Rents Paid, two more equity REITs raised their dividends over the last 24 hours. Industrial REIT Americold (COLD) declared a $0.22/share quarterly dividend, a 4.8% increase from its prior dividend while net lease REIT WP Carey (WPC) declared a $1.048/share quarterly dividend, a 0.2% increase from its prior rate. We've now seen 42 equity REITs raise their dividends so far through the first 11 weeks of 2021, which has been one of the strongest first quarters for REIT dividend growth on record.

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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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