income builder 2021 24420.png
apartment REITs
homebuilders ETFs
single family rental REITs
manufactured housing REITs
student housing REITs
data center REITs
Cell tower REITs
net lease REITs
industrial REITs
storage REITs
office REITs
mall REITs
hotel REITs
Timber REITs
healthcare REITs
Billboard REITs
shopping center REIT
Casino REITs
cannabis REITs
farmland REIT investing
mortgage REITs
1/1

Explore our Real Estate Indexes

The Easy Way To Invest in Real Estate

RIET Hoya Capital High Dividend Yield ETF.png
HOMZ_Logo_Just Ticker.png
ETF express.png
  • Alex Pettee, CFA

Stocks Slip • Rents Reaccelerate • Peace Talks Dismissed

  • U.S. equity markets stumbled Wednesday while commodities resumed their rally after officials dismissed reports of progress on peace talks between Russia and Ukraine while investors parsed a mixed slate of economic data.

  • Entering the session with week-to-date gains of 2%, the S&P 500 pulled back 0.6% today while Mid-Caps and Small-Caps were again under pressure with declines of 1.5% and 1.8%, respectively.

  • Real estate equities were mostly lower as well today as the Equity REIT Index declined 0.7% with 16-of-19 property sectors in negative territory while Mortgage REITs declined 1.4%.

  • All eyes have been on the yield curve this week following a rare inversion of the 10-2 Treasury yield spread - a dynamic that has historically occurred in the final stages of a Fed rate hike cycle.

  • Fresh rent data from Apartment List showed an acceleration in rents following a brief seasonal cooldown. Year-over-year rent growth currently stands at a "staggering" 17.1%. Elsewhere in the real estate sector, Camden Property was added to the S&P 500, joining 28 other REITs.

Income Builder Daily Recap

We recently launched Hoya Capital Income Builder - a premier income-focused investment research service through Seeking Alpha Marketplace - that will be the new exclusive home of all of Hoya Capital's investment research. Income Builder focuses on real income-producing asset classes that offer the opportunity for diversification, monthly income, capital appreciation, and inflation hedging. If you're not already on board, give us a try with a completely risk-free two-week trial and take a look around.

U.S. equity markets stumbled Wednesday while commodities resumed their rally after officials dismissed reports of progress on peace talks between Russia and Ukraine while investors parsed a mixed slate of economic data. Entering the session with week-to-date gains of 2%, the S&P 500 pulled back 0.6% today while Mid-Caps and Small-Caps were again under pressure with declines of 1.5% and 1.8%, respectively. Real estate equities were mostly lower as well today as the Equity REIT Index declined 0.7% with 16-of-19 property sectors in negative territory while Mortgage REITs declined 1.4%.

All eyes have been on the yield curve this week following a rare inversion of the 10-2 Treasury yield spread - a dynamic that has historically occurred in the final stages of a Fed rate hike cycle. After briefly climbing above 2.50% earlier this week, the 10-Year Treasury Yield retreated another 4 basis points to 2.36% today while the 2-Year Treasury Yield closed at 2.30% followed a mixed slate of economic data with ADP employment data beating estimates while Q4 GDP growth data was revised lower to 6.9%. Eight of the eleven GICS equity sectors were lower today, but the Energy (XLE) sector resumed its leadership as Crude Oil (CL1:COM) prices jumped 3% today while the broader Commodities (DJP) index advanced more than 2%.

Real Estate Daily Recap

Apartments: S&P announced that Camden Properties (CPT) will be added to the S&P 500 on April 4th, becoming the 29th REIT included in the large-cap benchmark. Real estate equities are still significantly under-represented in the large-cap benchmark, comprising less than 3% of the total weight of the S&P 500 ETFs (SPY). Elsewhere in the apartment sector, UDR (UDR) slumped 3% after launching a public offering of 7 million shares of common stock, raising gross proceeds of $406 million. We also saw fresh rent data from Apartment List which showed an acceleration in rents following a brief seasonal cooldown. Year-over-year rent growth currently stands at a "staggering" 17.1%, but most of that growth took place last spring and summer. Rents increased by an annualized rate of 7.2% in Q1 of 2022.

Cell Tower: This morning, we published our updated cell tower REIT report as an exclusive report on the Income Builder Marketplace. Cell Tower REITs - a perennial performance leader in the real estate sector - have uncharacteristically lagged this year, dipping into "bear market" territory for just the second time in history. Several factors are behind the recent slump including potential competition from Low-Earth-Orbit satellite networks, hurdles in 5G deployment related to airline interference, and broader tech-related weakness. Despite the hurdles, U.S. cell carriers are "all-in" on 5G, driving record levels of activity at cell tower sites and powering another year of double-digit earnings and dividend growth for Cell Tower REITs.

Single-Family Rental: Yesterday, we published Renting The American Dream. Single-Family Rental REITs have been one of the best performing property sectors since their emergence onto the scene in the mid-2010s, outperforming the REIT Index for three straight years entering 2022. Too much demand, and not enough housing supply: Despite the double-digit surge in rental rates over the past year, rising mortgage rates have tilted the affordability scale further towards renting. Powered by the historic surge in rents, SFR REITs reported earnings growth of nearly 20% last year and have delivered dividend growth of over 30% per year since 2019. We discussed how Property Technology - or "PropTech" - has been the key catalyst behind the maturation of the SFR REIT sector and our updated outlook for these REITs.

Mortgage REIT Daily Recap

Per the REIT Rankings Tracker available to Income Builder subscribers, residential mREITs advanced 1.6% today while commercial mREITs gained 1.7%. On another quiet day of newsflow in the mREIT space, Seven Hills (SEVN) and ACRES Realty (ACR) were the leaders on the upside while Cherry Hill (CHMI) and Annaly Capital (NLY) were laggards on the downside. The average residential mREIT pays a dividend yield of 10.91% while the average commercial mREIT pays a dividend yield of 7.39%.

Economic Data This Week

Employment data highlights another busy week of economic data in the week ahead, headlined by ADP Employment data on Wednesday, Jobless Claims on Thursday, and the BLS Nonfarm Payrolls report on Friday. Economists are looking for job growth of 488k in March following two-straight months of stronger-than-expected job growth while the unemployment rate is expected to decline to 3.7% from 3.8% in February. We'll also get the third and final revision to Q4 GDP data, which is expected to confirm that the U.S. economy was growing at a 7% rate at the end of 2021.

Access Our Complete Research Library

We recently launched Hoya Capital Income Builder - the new premier investment research service focused on real income-producing assets classes. Whether your focus is High Yield or Dividend Growth, we’ve got you covered with high-quality, actionable investment research and a comprehensive suite of tools and models to help build sustainable portfolio income targeting premium dividend yields of up to 10%. And of course, subscribers receive complete access to our investment research - including reports that are never published elsewhere - from Hoya Capital and our team of contributors.

Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

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.