ProShares UltraShort Real Estate ETF(SRS)- NYSEARCA
  • Thu, Sep. 22, 4:32 PM
    • Wells Fargo began raising concerns about the hot REIT sector in August, and today officially goes to Neutral from Overweight.
    • While the VNQ was up 1.8% today, the ETF and sector has been in a bit of a downtrend since the end of July. Why?
    • It seems to be tied to the chance of Fed rate hikes, says Wells, and the higher-yielding segments of the sector have had an especially rough go of it. There's also the realization that fundamentals have been softening over the past year.
    • "We favor taking some profits off the table and reallocating to asset classes we believe have better risk/return tradeoffs."
    • 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
    | Thu, Sep. 22, 4:32 PM | 10 Comments
  • Fri, Sep. 16, 3:20 PM
    • Today is the day (after the close) when REITs are officially broken out of financials and into their own sector, but that's not necessarily a reason to rush to buy, says BMO Capital Markets, initiating coverage of the new sector with a Neutral rating.
    • While the reclassification could boost asset flows, a big run-up already this year has left REITs with a fancy valuation at a time when rates might be set to begin a material move higher.
    • The Vanguard REIT ETF (NYSEARCA:VNQ) is up 14% YTD, but has fallen about 8% over the past handful of sessions as interest rates have climbed sharply.
    • 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
    | Fri, Sep. 16, 3:20 PM | 2 Comments
  • Fri, Sep. 9, 3:22 PM
    • As of the close today, equity REITs will be broken out of the S&P financial sector where they currently reside, and into their own category - that's 28 stocks with nearly $600B in market cap.
    • The real estate sector will account for about 3% of the total S&P 500, while financials - which account for about 13.1% - will drop below 12%.
    • In front of that, investors put $1.08B into REIT ETFs in August alone and $7.6B year-to-date. Of course, this could have less to do with the new sector, and more to do with performance chasing - REITs have far outperformed the broader indexes this year. The biggest beneficiary is the $34B Vanguard REIT Index Fund (NYSEARCA:VNQ) which has pulled in $4.57B.
    • 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
    | Fri, Sep. 9, 3:22 PM | 6 Comments
  • Fri, Sep. 2, 2:52 PM
    • The REIT sector's -3.28% return last month was well short of the S&P 500's flat performance. The tough month for REITs came alongside a sizable rise in interest rates and Fed rate hike expectations.
    • REITs continue to outperform the broader indexes for the year.
    • The lodging REITs were the best-performing sector last month, with a negative return of just five basis points. Also doing well on a relative basis were the single-family rental REITs.
    • Particularly roughed-up in August were specialty REITs, returning negative 12.85% as GEO Group and CCA both plunged on the DOJ plan to cut back its use of private prisons.
    • Source: Trepp REITcafe
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Fri, Sep. 2, 2:52 PM | 2 Comments
  • Tue, Aug. 30, 8:15 AM
    • It's smelling like a top in real estate to Laszlo Birinyi, who wonders why investor interest and outperformance is enough to merit a separate S&P classification for REITs (specifically, equity REITs; mortgage REITs will remain in the financials).
    • He compares the move to the the decision to add Apple to the DJIA after its near-1000% rise from the March 2009 bottom. Since, Apple is the worst-performing name in that index, with a total return of negative 12.9%.
    • Up 348% from the 2009 bottom, REITs are trading at 45x earnings - "not a compelling purchase," says Birinyi.
    • Besides, says Birinyi, there are plenty of ETFs out there through which investors can already get easy exposure to REITs. This move, he says, is about benefitting S&P, which should be able to earn licensing fees from the funds.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Tue, Aug. 30, 8:15 AM | 13 Comments
  • Wed, Aug. 17, 3:28 PM
    • Funds from operations for the equity REIT industry rose 7.1% for the quarter and were up 10.3% on a year-over-year basis, according to NAREIT. NOI gained 5% for the quarter and 9.1% Y/Y. Dividends of $12B were up 13.6% from Q2 one year ago.
    • Same-store NOI was up 4.3% Y/Y, with self-storage and data centers showing particular strength.
    • On a per share basis, FFO rose 5.5% Q/Q and 2.9% Y/Y; NOI gained 3.5% and 1.7%, respectively.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF
    | Wed, Aug. 17, 3:28 PM
  • Tue, Aug. 16, 10:59 AM
    • The major averages are off just modestly, but the Vanguard REIT Index Fund (NYSEARCA:VNQ) is lower by 1% as FRBNY boss Bill Dudley hit the tape this morning suggesting the possibility of a September rate hike and telling markets they're not being aggressive enough in pricing in Fed monetary tightening.
    • Fed Funds futures are currently pointing to about a 50% chance of one rate hike this year, and barely pricing in any Fed moves next year.
    • On tap for REITs this month is their move out of the financial sector and into their own separate sector classification.
    • A few names today: Kimco (KIM -1.7%), Realty Income (O -2.1%), Omega Healthcare (OHI -1.2%), Medical Properties Trust (MPW -1.2%), W.P. Carey (WPC -1.7%), Aimco (AIV -1.4%), Simon Property (SPG -1.1%), Public Storage (PSA -0.7%), Government Properties (GOV -1%), Boston Properties (BXP -1.2%), Stag Industrial (STAG -1.2%)
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS
    | Tue, Aug. 16, 10:59 AM | 55 Comments
  • Thu, Jul. 28, 3:31 PM
    • Despite REITs having delivered far better total returns than the S&P 500 over virtually any time frame from the last three decades, fund managers continue to underweight the group, often chalking up the outperformance to little more than the epic bond bull market.
    • Controlling for changes in rates, however, shows REITs have still held their own versus other companies, suggesting, says Green Street, that they've consistently delivered better operating results, which in turn would justify higher multiples.
    • Cumulative indexed profits from REITs over the last two decades have been 20% higher than what the S&P 500 delivered, according to the report. "Superior operating results ... has translated into market-beating total returns."
    • REITs could fare even better in the future, suggests Green Street. First, profit growth this decade has been hurt by heavy dilution thanks to too much leverage pre-crisis - a lesson REIT managers have learned. Second, profit margins in the S&P 500 are near all-time highs, but the same can't be said for REITs. Finally, REIT portfolios are higher quality than in the past, which should mean improved long-term growth.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Thu, Jul. 28, 3:31 PM | 3 Comments
  • Wed, Jul. 6, 4:46 PM
    • CEM Benchmarking looked at fund performance and capital allocation for more than 200 public and private pension funds from 1998-2014.
    • What it found was that listed equity REITs outperformed all other 11 asset classes in the study, with average annual net returns 11.95%. Private-equity was second at 11.37%, pulled down by management fees nearly four times higher than that of REITs.
    • The average annual cost for public REITs of 0.51% was the lowest of any alternative or real estate asset groups.
    • Hedge funds had average annual costs that were double those of REITs, and produced just half the net returns at 5.5%.
    • Curiously though, allocations to hedge funds skyrocketed during the study period, while those to REITs stayed about flat. Putting numbers on it, hedge fund allocations grew to 8.36% from 1.46%, while listed REIT allocations of 0.62% edged up from 0.36%.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Wed, Jul. 6, 4:46 PM
  • Fri, Jun. 24, 10:30 AM
    • A sharp drop in long-term rates and vanquished expectations for even one rate hike this year has income players bidding up the prices of utility stocks (XLU +0.7%) and certain REITs even as the major average fall more than 2% post-Brexit.
    • A check of Fed Funds futures finds traders not fully pricing in a 25 basis point rate hike until 2018!
    • The mortgage REIT sector (REM +0.5%) welcomes the news, with players like Annaly (NLY +1.7%), American Capital Agency (AGNC +1.1%), Two Harbors (TWO +1.7%), and Chimera (CIM +1.3%) leading the way. Western Asset Mortgage (WMC -0.8%) is a laggard after slashing its dividend by more than 30% last night.
    • Equity REITs are decidedly mixed. Retail names like Realty Income (O +2.4%), National Retail (NNN +2%), and Vereit (VER +0.9%) are higher, as are healthcare players like HCP (HCP +1.2%) and Medical Properties Trust (MPW +0.1). Apartment REITs are mostly lower, as are mall operators like Simon Property (SPG -0.8%) and General Growth (GGP -0.7%).
    • The dollar is surging post-Brexit, however, and that's taking a chunk out of the hotel REITs: Hospitality Properties (HPT -1.5%), Sunstone Hotel (SHO -2.7%), LaSalle (LHO -3.8%), Pebblebrook (PEB -2.4%), RLJ Lodging (RLJ -2.5%).
    • ETFs: XLU, UTG, IDU, VPU, GUT, BUI, FUTY, RYU, UPW, FXU, PUI, SDP, PSCU, FUGAX, UTLF, JHMUVNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI
    | Fri, Jun. 24, 10:30 AM | 43 Comments
  • Mon, Jun. 13, 7:31 AM
  • Wed, Jun. 8, 3:31 PM
    • Active fund managers routinely can't beat the indexes, and one big reason is their continued ignorance of REITs. Since 2000, REITs - little more than conduits for renting real estate and passing along rent payments to investors (minus a management fee, of course) - have returned an average 12% per year, crushing #2 finisher high-yield bonds at 7.9%, and positively walloping the S&P 500's 4.1% return.
    • Yet 40% of large-cap core mutual funds which invest mostly in S&P 500 stocks own zero REITs, according to Goldman Sachs. Overall, funds with no REIT exposure have a total of $528B in assets. Those funds that do own REITs have just 2% of assets in the names - less than 2/3 of the sector's weight in the market.
    • Later this summer, REITs will get their own sector classification, thus making it clear which managers are underweighting or altogether avoiding real estate.
    • The question, asks Ken Brown, is why do the same managers who routinely pile into the flavor of the month in tech stocks, for instance, avoid REITs? First off, there's little sex appeal. Second, REITs maybe move too much with the macro environment than managers are comfortable with. Third, there's the constant idea that higher interest rates are right around the corner - REITs tend to underperform when rates rise.
    • See also: Extra Space Storage - why didn't we buy it? (June 8)
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Wed, Jun. 8, 3:31 PM
  • Fri, Jun. 3, 10:12 AM
    | Fri, Jun. 3, 10:12 AM
  • Tue, May 24, 3:57 PM
    • MSCI and S&P Dow Jones at the end of August will be moving REITs out of the financial sector and into a separate REIT classification.
    • David Kostin and team figure the move will lead to $19B in REIT-buying demand from active mutual fund managers. The biggest demand will come from those managers who currently have no REIT exposure as they will instantly be underweight the sector. Kostin figures this describes a whopping near-40% of large-cap core fund managers.
    • While it might mean hefty support for the names in the weeks up to the change, the Fed and its on-again, off-again rate hikes might matter most.
    • REITs represent 3% of the overall market today vs. just 0.1% in 2003. They represent 18% of the S&P 500's financial sector.
    • ETFs: VNQ, IYR, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, RFI, JRS, KBWY, NRO, DRV, RIT, RIF, REK, FRI, DRA, FTY, FREL, LRET, PSR, WREI, XLRE, IARAX
    | Tue, May 24, 3:57 PM | 15 Comments
  • Wed, May 18, 2:42 PM
    | Wed, May 18, 2:42 PM | 91 Comments
  • Fri, May 13, 12:43 PM
    • Financials are already laggards, having shed more than 3% this year - the third-worst performance of the ten S&P 500 sectors - versus the broader market's 1% gain. And that's with the contribution of REITs, which are higher by 6.7%.
    • Come September, though, real estate stocks are set to be split off from financials in the first S&P 500 sector lineup change since the current one's introduction in 1999.
    • Investors have pulled about $4.8B from mutual funds and ETFs focused on financials this year - how much might they have pulled, and how much will they pull once the popular REITs have their own home?
    • State Street Global Advisors late last year launched a special real-estate sector ETF (NYSEARCA:XLRE), and it's higher by 4.2% this year versus the Financial Select SPDR's (NYSEARCA:XLF2.8% loss.
    • "We're going to follow the changes in the benchmark," says Vanguard, but iShares' U.S. Financials ETF (NYSEARCA:IYF) follows a different index (it's off 1.7% this year), so will be unaffected by the change.
    • Source: WSJ
    • ETFs: XLF, VNQ, IYR, FAS, FAZ, UYG, VFH, DRN, RQI, URE, SCHH, ICF, RWR, SRS, RNP, IYF, RFI, JRS, BTO, KBWY, NRO, DRV, RIT, IYG, FNCL, SEF, FXO, RIF, REK, DRA, FRI, RYF, FINU, FTY, RWW, FREL, LRET, PSR, XLFS, WREI, FINZ, XLRE, IARAX, FAZZ
    | Fri, May 13, 12:43 PM | 13 Comments
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