Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Special Dividends • Vaccinations Begin • Stimulus Stalemate

Summary

  • U.S. equity markets finished mixed Monday as an ongoing stalemate in fiscal stimulus negotiations and additional shutdowns in NYC offset optimism from the first coronavirus vaccination in the United States.

  • Coming off a decline of 1.0% last week, the S&P 500 finished lower by 0.44% today while the Dow Jones Industrial Average slipped 185 points. The tech-heavy Nasdaq gained 0.50%.

  • Real estate equities were mixed on the day as the broad-based Equity REIT ETF declined by 0.4% today with 11 of the 18 property sectors in negative territory.

  • The next several weeks of "REIT Dividend Declaration Season" should be especially interesting as REITs that had previously suspended or reduced dividends amid the pandemic seek to meet their distribution requirements to qualify as a REIT.

  • This morning, shopping center REIT Urban Edge (UE), which had previously suspended its dividend back in April, declared a $0.46/share special dividend and also announced its intention to reinstate its quarterly dividend at $0.15/share beginning in March 2021.

Real Estate Daily Recap

U.S. equity markets finished mixed Monday as an ongoing stalemate in fiscal stimulus negotiations and additional shutdowns in NYC offset optimism from the first coronavirus vaccination in the United States. Coming off a decline of 1.0% last week, the S&P 500 ETF (SPY) finished lower by 0.5% today while the Dow Jones Industrial Average (DIA) slipped 185 points. The tech-heavy Nasdaq 100 (QQQ) gained 0.7%. Real estate equities were mixed on the day as the broad-based Equity REIT ETF (VNQ) declined by 0.4% today with 11 of the 18 property sectors in negative territory. The Mortgage REIT ETF (REM), however, gained 0.3% on the day.

As discussed in our Real Estate Weekly Outlook, the battle against COVID-19 is potentially at a key turning point as vaccinations of Pfizer's (PFE) vaccine began this morning and could be administered to "every American who wants it" by the end of the second quarter of 2021. Frustrations over the continued stall in stimulus talks weighed on equity markets throughout the day, however, as 9 of the 11 GICS equity sectors finished in negative territory for the day as the Technology (XLK) and Consumer Discretionary (XLY) sectors leading to the upside. Another strong day from the home improvement retailers lifted the Hoya Capital Housing Index to modest gains as well.

Following a slow week of economic data, we have a jam-packed slate of data in the week ahead. On Wednesday, we'll see Retail Sales data for November, which set fresh record-highs last month. Also on Wednesday, the NAHB will release Homebuilder Sentiment data for December, which also climbed to the highest level on record in the last report. On Thursday, we'll see Housing Starts and Building Permits for November which are each expected to continue their strong post-pandemic rebound. We'll see a flurry of PMI data throughout the week, and on Wednesday and Thursday, we'll be watching the weekly Mortgage Applications and Jobless Claims data as well.

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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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