Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

REITs Rally • Office Dividend Cut • Apartment Spin-Off

Summary

  • U.S. equity markets rallied Tuesday on signs of progress on the long-stalled fiscal stimulus renewal and amid the continued deployment and administration of coronavirus vaccinations across the United States.

  • Finishing less than 0.5% from fresh record-highs, the S&P 500 finished higher by 1.3% today while the Dow Jones Industrial Average jumped 338 points. Mid-Caps and Small-Caps set fresh record-highs.

  • Real estate equities led the gains today as the broad-based Equity REIT ETF jumped 2.1% with 17 of 18 property sectors in positive territory. Mortgage REITs gained 1.6%.

  • Cannabis REIT Innovative Industrial (IIPR) announced yesterday afternoon that it was increasing its dividend for the third time this year. IIPR is one of 46 equity REITs that has raised its dividend this year and one of six REITs that has raised multiple times this year.

  • Several troubled property sectors are still moving in the wrong direction. Office REIT Paramount Group (PGRE), which owns a NYC and SF portfolio, slashed its dividend by 30%. Just 6 REITs have reduced their dividend since June, 4 of which have been office REITs.

Real Estate Daily Recap

U.S. equity markets rallied Tuesday on signs of progress on the long-stalled fiscal stimulus renewal and amid the continued deployment and administration of coronavirus vaccinations across the United States. Finishing less than 0.5% from fresh record-highs, the S&P 500 ETF (SPY) finished higher by 1.3% today while the Dow Jones Industrial Average (DIA) jumped 338 points. The tech-heavy Nasdaq 100 (QQQ) eclipsed record-highs, gaining 1.0%. Real estate equities led the gains today as the broad-based Equity REIT ETF (VNQ) jumped 2.1% with 17 of 18 property sectors in positive territory. The Mortgage REIT ETF (REM), meanwhile, gained 1.6% on the day.

Coronavirus vaccinations have now commenced in all fifty states and shipments to date of Pfizer's (PFE) vaccine are enough to vaccine nearly 3 million individuals. More vaccines are on the way after the FDA cleared the way for the approval of Moderna's (MRNA) vaccine which could begin shipping "within days." All 11 GICS equity sectors finished higher on the day, led by the Utilities (XLU), Energy (XLE), and Materials (XLB) sectors. Residential REITs lifted the Hoya Capital Housing Index ahead of a jam-packed slate of housing data over the next three days.

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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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