Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Roaring REITs [Daily Recap]

  • U.S. equity markets closed a strong week with modest gains on Friday as the major averages hovered near record-highs ahead of a long President's Day weekend.

  • The S&P 500 finished higher by 0.2% on the day, ending the week with gains of more than 1.5%. The 10-Year Treasury Yield declined by 3 basis points, closing at 1.59%.

  • The broad-based commercial Real Estate ETF (VNQ) completed one of it's best weeks of the past decade, gaining another 1.0% on the day, led by data center, storage, healthcare REITs.

  • REITs ended the week with gains of more than 4% on a frenetic week of earnings and M&A news. Digital Realty led today's gains after reporting strong leading demand yesterday afternoon.

  • Stay tuned for full coverage of this week's economic data in our Real Estate Weekly Outlook report published tomorrow morning.

Real Estate Daily Recap

U.S. equity markets closed a strong week with modest gains on Friday as the major averages hovered near record-highs ahead of a long President's Day weekend. The S&P 500 ETF (SPY) finished higher by 0.2% on the day, ending the week with gains of more than 1.5%. The 10-Year Treasury Yield (IEF) declined by 3 basis points to end at 1.59% after a luke-warm retail sales report this morning. The broad-based commercial Real Estate ETF (VNQ) completed one of it's best weeks of the past decade, gaining another 1.0% on the day, ending the week with gains of more than 4% on frenetic week of earnings and M&A news.

Residential REITs were among the leaders today, powering the 0.5% gains today from the Hoya Capital Housing Index, the benchmark that tracks the performance of the US Housing Industry. Residential flooring supplier Mohawk (MHK) gained nearly 4% after reporting better-than-expected results yesterday afternoon, citing "positive trends in housing that should be a tailwind [for 2020]." Residential mortgage REIT AGNC Investments (AGNC) was also a leader today after reporting solid results yesterday afternoon. Redfin (RDFN) jumped another 4% and is already higher by nearly 50% this year after the broker reported an 88% jump in revenue, powered by increased housing market activity in late 2019.

Data center REIT Digital Realty (DLR) rose more than 3% today after reporting better-than-expected results yesterday afternoon as the closely-watched net bookings metric came in at a solid $69M in 4Q, matching the strong 3Q rate. We'll publish our updated Data Center REIT report next week. Healthcare Trust of America (HTA) gained 2.5% after reporting solid results yesterday afternoon as well, forecasting same-store NOI growth of 2.5% for 2020 at the midpoint. Washington REIT (WRE) lagged today after the office owner lowered 2020 guidance, forecasting same-store NOI to increase by 1.5% at the midpoint. Public Storage (PSA) gained nearly 2% today after reports that it is exploring an acquisition of Australian self-storage company National Storage REIT (ASX:NSR). CatchMark Timber (CTT) finished roughly flat after reporting in-line results yesterday afternoon.

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