Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

Apartment REITs
Data Center REITs
Mall REITs
Net Lease REITs
Hotel REITs
Single Family Rental REITs
Mobile Home REITs
Housing100logo.png
ETF express.png
  • Alex Pettee, CFA

Stimulus Stalemate | REIT M&A | Mortgage Rates At Record-Lows

Daily Recap

  • U.S. equity markets finished lower Thursday after Congress failed to reach a compromise on a potential coronavirus relief bill and as the "center of the pandemic" returns to Western Europe. Following gains of 2.0% yesterday, S&P 500 finished lower by 1.7% today while the Dow Jones Industrial Average dipped 406 points and the Nasdaq 100 declined 2.0%. After finishing higher by 1.0% yesterday, Equity REITs retreated by 1.3% today with 17 of 18 property sectors finishing in negative territory. Mortgage REITs declined by 1.0%. Today's declines came after a lukewarm Initial and Jobless Claims report following several weeks of encouraging data. Initial Jobless Claims held exactly steady last week at 884k, but Continuing Claims increased sightly to 13.39 million from 13.29 million. Simon Property (SPG) and Brookfield Property (BPY) have partnered on a $800m deal to save JC Penney from bankruptcy. Meanwhile, Brookfield Asset Management (BAM) is seeking a potential sale of its Simply Self Storage unit. Public Storage (PSA), ExtraSpace (EXR), and CubeSmart (CUBE) could be potential bidders.

U.S. equity markets finished lower for the fourth day in the past five Thursday after Congress failed to reach a compromise on a potential coronavirus relief bill and as the unfortunate claim of "center of the pandemic" returns to Europe amid a reacceleration in case counts in several countries. Following gains of 2.0% yesterday, S&P 500 ETF (SPY) finished lower by 1.7% today while the Dow Jones Industrial Average (DJI) dipped 406 points and the Nasdaq 100 (QQQ) declined 2.0%. After finishing higher by 1.0% yesterday, Equity REIT ETFs (VNQ) retreated by 1.3% today with 17 of 18 property sectors finishing in negative territory. The Mortgage REIT ETF (REM), meanwhile, lower by 1.0% after gaining 1.3% yesterday.

The "tech wreck" trading action that began last Thursday and dragged the major indexes into "correction territory" earlier this week may not be done quite yet. Reversing yesterday's sector performance, all 11 GICS equity sectors finished in negative territory today, dragged down by the Energy (XLE), Technology (XLK), and Utilities (XLU) sectors. Restoration Hardware (RH) led the Hoya Capital Housing Index to outperformance today after the home furnishings company reported a stronger than expected outlook, citing favorable trends relating to the strength of the U.S. housing market. On that point, the 30-year fixed-rate mortgage declined to record-lows at 2.86% last week in the Freddie Mac Mortgage Market Survey, which helped to power a 40% increase in home purchase mortgage applications from last year. 

Today's declines came after a lukewarm Initial and Jobless Claims report following several weeks of encouraging data. Initial Jobless Claims held exactly steady last week at 884k, but Continuing Claims increased sightly to 13.39 million from 13.29 million in the prior week. Since the peak in early May at around 25 million, however, Continuing Claims have retreated by 11.5 million. The Bureau of Labor Statistics reported that the U.S. economy added 1.37 million jobs in August - slightly better than economists' estimates for gains of 1.35 million. Most notably, however, the "headline" unemployment rate ticked down to 8.4% from 10.2% in the prior month as the separate BLS Household Survey - on which the unemployment rate is derived from - showed employment gains of 3.76 million jobs in August - the second largest month of job growth in the survey's history.

To continue reading, click here to visit Seeking Alpha!

  • Facebook Social Icon
  • Twitter Social Icon
  • LinkedIn Social Icon

Hoya Capital Real Estate, LLC

Invest@HoyaCapital.com

(833) HOYA-CAP

Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

Privacy Policy 

 Client Relationship Summary 

Hoya Capital's ADV Part 2

Important Disclosures, Definitions, & List of Holdings 

Seeking-Alpha-Logo.png

The Easy Way To Invest In Real Estate