Homebuilders And REITs Shrug Off Geopolitics



  • US equities jumped nearly 2% this week as trade and geopolitical tensions eased following reports of constructive meetings with NATO and the UK. Homebuilders climbed 1%.
  • REITs held steady ahead of earnings season, which kicks off next week. The sector has climbed into positive territory YTD as fears over rising rates and inflation have subsided.
  • Fueled by rising oil prices, consumer prices are rising at the fastest rate since 2012. Core CPI and PPI in June, however, were roughly in line with expectations and inflation expectations remain.
  • Evidence of broad-based strength in the labor markets continues to show across nearly all metrics. The rate of hiring increased to the fastest rate since 2015 according to JOLTS data.
  • The rate of voluntary quits continues to rise, a sign of increased labor market dynamism and indicating that workers are more confident about their financial situation. Layoffs are near record-lows.

Real Estate Weekly Review

real estate weekly review

After reaching a fever-pitch last week with tit-for-tat tariff announcements between the US and China, geopolitical and trade concerns eased this week following reports of a productive and constructive European tour by the Trump Administration. The S&P 500 (SPY) jumped nearly 2% as equity markets cheered the nomination of Brett Kavanaugh to the high court, who has a demonstrated record of scrutinizing government overregulation on businesses. Inflation and JOLTS data also suggested that the "Goldilocks" economic environment of solid growth and modest price pressure appears to be continuing in 2018.

The REIT ETFs (VNQ and IYR) finished the week modestly lower ahead of earnings season, which kicks-off next week. The 10-year yield held steady as oil prices (NYSEARCA:USO) retreated following Libya announced it will re-open oil ports following a two-week hiatus. Homebuilders, (XHB and ITB) meanwhile, climbed 1%.

real estate performance

(Hoya Capital Real Estate, Performance as of 2pm Friday)

In other areas of the real estate sector, mortgage REITs (REM) finished the week lower by roughly 1% while international real estate (VNQI) finished lower by 1.5%. The Hoya Capital Housing Index, which tracks an average of residential REITs, homebuilders, homebuilding products, financing, and home improvement retailers, climbed 0.5%, powered by strength in the home improvement sector.

Real Estate in the News

Earnings season kicks off next week in the real estate sector with industrial REIT Prologis (PLD) and cell tower REIT Crown Castle (CCI) set to announce earnings on Tuesday and Wednesday, respectively. In our 1Q18 Earnings Recap, we discussed that REIT metrics appear to have bottomed in 2017. Same-store NOI growth rose 2.5% on a TTM basis. Dividends and FFO/share improved in 1Q18 but remain modestly lower YoY. Fundamentals are showing signs of improvement across most sectors, reversing a downtrend that began in late 2016. Resilient demand has buffered

This article was written by

Hoya Capital profile picture
Build sustainable portfolio income with premium dividend yields up to 10%.

Real EstateHigh Yield Dividend Growth.

 Visit www.HoyaCapital.com for more information and important disclosures. Hoya Capital Research is an affiliate of Hoya Capital Real Estate ("Hoya Capital"), a research-focused Registered Investment Advisor headquartered in Rowayton, Connecticut. 

Founded with a mission to make real estate more accessible to all investors, Hoya Capital specializes in managing institutional and individual portfolios of publicly traded real estate securities, focused on delivering sustainable income, diversification, and attractive total returns. 

Collaborating with ETF Monkey, Retired Investor, Gen Alpha, Alex MansourThe Sunday Investor, and Philip Eric Jones for Marketplace service - Hoya Capital Income Builder. 

Hoya Capital Real Estate ("Hoya Capital") is a registered investment advisory firm based in Rowayton, Connecticut that provides investment advisory services to ETFs, individuals, and institutions. Hoya Capital Research & Index Innovations is an affiliate that provides non-advisory services including research and index administration focused on publicly traded securities in the real estate industry.

This published commentary is for informational and educational purposes only. Nothing on this site nor any commentary published by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. This commentary is impersonal and should not be considered a recommendation that any particular security, portfolio of securities, or investment strategy is suitable for any specific individual, nor should it be viewed as a solicitation or offer for any advisory service offered by Hoya Capital. Please consult with your investment, tax, or legal adviser regarding your individual circumstances before investing.

The views and opinions in all published commentary are as of the date of publication and are subject to change without notice. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Any market data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any outlook made in this commentary will be realized.

Readers should understand that investing involves risk and loss of principal is possible. Investments in real estate companies and/or housing industry companies involve unique risks, as do investments in ETFs. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes.

Hoya Capital has no business relationship with any company discussed or mentioned and never receives compensation from any company discussed or mentioned. Hoya Capital, its affiliates, 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 additional important disclosures is available at www.HoyaCapital.com.

Disclosure: I am/we are long HD, WMT, VNQ, SPY, MAA, CPT, OHI, PLD, GGP, STOR, SHO, SUI, ELS, ACC, EDR, DLR, COR, REG, CUBE, PSA, EXR, BXP, EQR, INVH, SPG, HST, TCO, AMT, SBRA, AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: All of our research is for educational purposes only, always provided free of charge exclusively on Seeking Alpha. Recommendations and commentary are purely theoretical and not intended as investment advice. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. For investment advice, consult your financial advisor.

Recommended For You

Comments (7)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.