REITs: This Time Was Different
The Great Financial Crisis resulted in long-term, lasting pain for the real estate sector, but "this time was different" for most REITs due to harsh lessons learned from past crises.
Despite early struggles with rent collection, REITs' strong balance sheets and access-to-capital prevented the type of shareholder dilution that resulted in a "lost decade" for REITs in the GFC's aftermath.
REITs recorded a sequential improvement across all critical metrics in Q4, powering a historic wave of dividend growth in early 2021. However, several harder-hit property sectors are not yet out-of-the-woods.
REITs are no longer "cheap," but that may be a good thing. Premium valuations in the public markets should facilitate external growth opportunities and may finally kick-start the IPO pipeline.
In our quarterly "State of the REIT Sector" report, we analyze the recently-released NAREIT T-Tracker data to review high-level REIT fundamentals over the past quarter through a series of charts.
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.