Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Yields Retreat • Dividend Boosts • REIT Earnings

Summary

  • U.S. equity markets were mixed Friday but ended a choppy week with broad-based declines as the "reopening rotation" pushed Treasury yields to mid-pandemic highs and pressured valuations of COVID-winners.

  • Ending the week with declines of nearly 2%, the S&P 500 finished lower by 0.5% today while the Dow Jones Industrial Average finished lower by 475 points.

  • Real estate equities were under pressure today but outperformed on the week as the broad-based Equity REIT ETFs finished lower by 1.5% with 4-of-19 property sectors in positive territory.

  • After briefly jumping above 1.60% yesterday, bonds caught a bid today as the 10-Year Treasury Yield retreated back below 1.50% after the BEA reported PCE inflation data that was roughly in-line with expectations.

  • Beat and Boost continues to be the theme of REIT earnings season. A dozen REITs raised their dividend this week including three more of the last 24 hours - PLD, AMT, DLR - bringing the total this year to 33.

Real Estate Daily Recap

U.S. equity markets were mixed Friday but ended a choppy week with broad-based declines as the "reopening rotation" pushed Treasury yields to mid-pandemic highs and pressured valuations of COVID-winners. Ending the week with declines of nearly 2%, the S&P 500 ETF (SPY) finished lower by 0.5% today while the Dow Jones Industrial Average (DIA) finished lower by 475 points. Real estate equities were under pressure today but outperformed on the week as the broad-based Equity REIT ETFs (VNQ) finished lower by 1.5% with 4-of-19 property sectors in positive territory while the Mortgage REIT ETFs (REM) gained 1.2%.

After briefly jumping above 1.60% yesterday, bonds caught a bid today as the 10-Year Treasury Yield (IEF) retreated back below 1.50% after the BEA reported PCE inflation data that was roughly in-line with expectations. Three of the eleven GICS equity sectors finished higher today as the Technology (XLK) and Communications (NYSEARCA:XLC) sectors bounced back on an otherwise rough week while homebuilders and the broader Hoya Capital Housing Index also outperformed today. We'll publish a full analysis and commentary of this week's developments in the real estate industry including more than 50 REIT earnings reports, as well as an analysis of the busy week of economic data in our Real Estate Weekly Outlook report on Saturday morning.

Real Estate Earnings Update

Beat and Boost: We're now on the home stretch of another newsworthy REIT earnings season. REITs have generally reported better-than-expected results across the major property sectors and we've seen a wave of dividend boosts in the first two months of this year including three more yesterday afternoon from Lamar Advertising (LAMR), Digital Realty (DLR), and Prologis (PLD) bringing the total this year to 33.

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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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