Wed, Nov. 9, 1:48 PM
- The 10-year U.S. Treasury yield is higher this session by 21 basis points to 2.07% after having fallen as low as 1.70% at one point last night. TLT -4%, TBT +8%
- On the shorter end, Fed Funds futures - after last night having priced out any chance of rate hike in December - have returned to pricing in nearly 100% chance of a move.
- Facing more serious competition for yield, utilities (XLU -3.4%) and REITs (VNQ -1.7%) are having a rough session.
- Individual REIT names: Realty Income (O -5.1%), Spirit Realty (SRC -3.3%), Omega Healthcare (OHI -2%), Welltower (HCN -3.1%), Equity Residential (EQR -2.4%), AvalonBay (AVB -2.1%), General Growth (GGP -2.3%), Kimco (KIM -2.3%), DDR (DDR -2.3%).
- Notably fading the move even as the dollar turns sharply higher are the lodging REITs: Ashford (AHT +2.9%), LaSalle Hotel (LHO +3.1%), Pebblebrook Hotel (PEB +3.9%), Chatham Lodging (CLDT +4.2%), Hersha (HT +3.7%)
Sat, Nov. 5, 12:15 PM
- Interest rate fears have helped send REITs tumbling over the past few months, with the Vanguard REIT Index ETF (NYSEARCA:VNQ) down from 15% from its July high, and now yielding 4.3% - more than double that of the S&P 500.
- Source: Barron's Andrew Bary
- Notable REITs at 52-week lows include Equity Residential (NYSE:EQR), Macerich (NYSE:MAC), Simon Property Group (NYSE:SPG), and Public Storage (NYSE:PSA).
- Green Street's Mike Kirby: REITs aren't pound-the-table inexpensive, but on the attractive side of fair value. Citigroup: "While there is undoubtedly deceleration in fundamentals ... the REIT sector is in its best shape from a balance-sheet, portfolio, and operations perspective in its history.”
- Negatives include too much apartment supply in formerly hot markets on the coasts, a flattening in Manhattan office rents, and pressure on malls from the boom in e-commerce.
- Even with all that, Kirby sees the industry's AFFO rising 6.3% this year, and 7% in 2017 and 2018. REITs trade at 20x forward AFFO - pricey vs. the S&P 500, but worth it if they produce better profit growth.
- Another valuation method is to look at the cap rates of portfolio properties, and a check finds REITs like Boston Properties (NYSE:BXP), and Simon Property are selling below their private-market values. Why, asks Kirby, would a pension fund or sovereign wealth fund pay a higher price (lower cap rate) for a Manhattan property when they could get a whole portfolio of NYC office buildings at a cheaper valuation by buying SL Green (NYSE:SLG)?
- ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, DRA, FRI, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX, RORE
Mon, Oct. 31, 8:32 AM
- Pulling his Underperform rating on Equity Residential (NYSE:EQR), analyst Richard Anderson notes the falling stock is closing in on the $60 price target he gave it back in July. The guidance cuts have stopped though, he says, noting the company last week reiterated full-year revenue growth forecasts. The new $62 PT compares to Friday's close of $60.18.
- Upgrading Aimco (NYSE:AIV) to Buy from Neutral, Anderson says the company seems more confident about 2017 than most peers. Half the company's capital is tied up in non-Class A price points, says Anderson, thus giving it some insulation from the pricing pressure being felt in the more expensive coastal markets.
- Anderson: "In some ways, AIV is a reincarnation of the Home Properties business model -- owning lower price-point assets and upgrading them through a dedicated redevelopment program."
- His $49 price target is 14% above Friday's close.
Thu, Oct. 27, 10:42 AM
- The 10-year Treasury yield is making new bear-cycle highs today, up another seven basis points to 1.86% - its perkiest level since May. The move up in yields is global, with U.K. 10-years up 11 bps and Germany's up 8.5 bps.
- Earlier today, the U.K. reported Q3 GDP growth of 0.5% - far better than what had been predicted post-Brexit.
- Facing at least a little more competition in the yield department, equity REITs have turned sharply lower, with VNQ down 2.1%, and IYR off 1.8%. Mortgage REITs (REM -0.6%) are faring a little better as solid Q3 earnings begin to roll in.
- The major U.S. averages have given up early gains and turned red, led by the S&P 500 and Nasdaq, both off 0.25%.
- Individual equity REITs: Verreit (VER -2.2%), Welltower (HCN -2.4%), Equity Residential (EQR -1.6%), Omega Healthcare (OHI -3.2%), Simon Property (SPG -3.2%), General Growth (GGP -2.6%), Public Storage (PSA -2.9%), Gramercy Property (GPT -1.9%), Washington Real Estate (WRE -1.2%), Hersha (HT -2.9%), Sunstone Hotel (SHO -1.4%), Stag Industrial (STAG -2%)
- Mortgage REITs: AGNC Investment (AGNC -1.5%), Annaly (NLY -0.7%), Two Harbors (TWO -0.4%), Capstead (CMO +0.3%)
- ETFs: VNQ, IYR, MORL, REM, MORT, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, DRA, FRI, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX, RORE
Wed, Oct. 26, 7:50 AM
- Q3 normalized FFO of $0.78 per share compares to $0.89 earned a year ago, but the company's large property sale cost it $0.22 in FFO.
- Same-store results showed revenue higher by 3.4% Y/Y, expenses up 5.9%, and NOI 2.4%. Average rental rate was up 3.4% and occupancy slipped 0.2%.
- Q4 normalized FFO guidance of $0.77-$0.81 per share. Full-year normalized FFO per share guidance of $3.06-$3.10 is narrowed a penny at each end from previous.
- The conference call is at 10 ET
- Previously: Equity Residential FFO in-line, beats on revenue (Oct. 25)
- EQR flat premarket
Tue, Oct. 25, 4:20 PM
Mon, Oct. 24, 5:35 PM
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Tue, Oct. 4, 4:29 PM
- Chatter of the ECB's plan to begin tapering monthly bond purchases sent interest rates sharply higher today, and REITs sharply lower.
- The 10-year Treasury yield gained 6.3 basis points to 1.688%.
- The mortgage REITs (REM -2.2%): Annaly (NLY -3.1%), Armour (ARR -1.2%), Two Harbors (TWO -2.9%), Chimera (CIM -3.9%), CYS (CYS -2.4%), Invesco (IVR -3%), Western Asset (WMC -2.8%), MFA Financial (MFA -2.7%), AG Mortgage (MITT -3.1%)
- Equity REITs (VNQ -1.4%): Realty Income (O -2.6%), WellTower (HCN -2.6%), HCP (HCP -2%), Vereit (VER -2.3%), Equity Residential (EQR -0.9%), Simon Property (SPG -1.5%), Public Storage (PSA -1.8%), Government Properties (GOV -2.7%), Gramercy Property (GPT -2.2%), Stag Industrial (STAG -3%)
- ETFs: VNQ, IYR, MORL, REM, MORT, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, DRA, FRI, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
Tue, Sep. 27, 8:43 AM
- After having struggled this year thanks to a series of guidance cuts, Equity Residential (NYSE:EQR) says it's on track to meet full-year same-store growth expectations of 3.5-4%.
- At issue for EQR has been softness in the San Francisco and NY markets, but since the latest guidance cut in late July, the company says it's meeting revised targets for occupancy and base rent. As for renewal rent increases, the normal seasonal reduction has been exacerbated by SF and NY declines, but growth overall is expected to level off at 3-4% in Q4 (see pg. 34 of new presentation).
- Taking a closer look at SF, the company says that while the current inventory expansion there is historic, the area still faces a structural housing shortage (pg. 27).
Wed, Sep. 14, 6:26 AM
Thu, Sep. 8, 10:14 AM
- May-August is typically peak apartment-leasing season in Manhattan, but landlords were unable to push up rents, as a report pegs the median monthly rent last month at $3,399, flat from one year ago. This comes as 6,285 new leases were signed, the most in any month dating back to January 2008.
- At issue, according to Jonathan Miller of property appraiser Miller Samuel, is excess supply - and it's likely to remain a challenge for the next year or two.
- According to Citi Habitats, 19% of new leases signed last month came with some form of landlord concession such as a free month, or payment of the broker's fee. One year ago in August, such sweeteners were seen on just 7% of deals.
- Interested parties: AvalonBay (AVB -1.2%), Equity Residential (EQR -1.6%), UDR (UDR -1%), Aimco (AIV -1%)
Wed, Aug. 3, 10:44 AM
Wed, Jul. 27, 3:18 PM
- "This one is very surprising to us, from what we view to be a top-tier organization with the sophisticated infrastructure that usually communicates future performance within a relatively visible band," says Mizuho Securities, downgrading Equity Residential (EQR -6%) to Underperform from Neutral after the company guided lower for the third time this year.
- BMO Capital also downgrades.
- Same-store revenue growth is now forecast at 3.5-4% vs. an upper limit of 4.5% when guidance was last cut in June.
- "Markets do reset from time to time, either due to new supply or changes on the demand side of the equation," says EQR CEO David Neithercut on the earnings call. "Unfortunately at the present time, we’re experiencing both factors in two of our most important markets.”
- COO David Santee: "Certainly the tech jobs are not growing at the pace they were last year, if they're growing at all."
Wed, Jul. 27, 1:00 PM
Wed, Jul. 27, 9:27 AM
- Equity Residential (NYSE:EQR) warned back on June 1 of softness in San Francisco and NYC. The shares tanked that day, but recovered in the ensuing weeks.
- Alongside last night's Q2 miss, the company again took note of the headwinds of slowing job growth on the coasts as it took down the top end of full-year FFO guidance.
- Taking note of what is now the 3rd guidance cut this year, BMO Capital downgrades to Market Perform from Outperform and cuts its price target to $70 from $76.
- Shares -5.45% premarket to $66.01.
Tue, Jul. 26, 4:33 PM