Entering text into the input field will update the search result below

REITs Surge Amid Reopening Rally


  • U.S. equity markets extended their reopening rally this week amid signs of an emerging "V-shaped" post-pandemic economic recovery juxtaposed with scenes of violence in the streets of major U.S. cities.
  • The U.S. economy unexpectedly added 2.5 million jobs in May - the single-largest month of job growth ever - following two months of devastating job losses during the coronavirus-related shutdowns.
  • Closing 42% above its lows in late March, the S&P 500 added another 4.9% this week while the Nasdaq climbed to fresh record-highs, a seemingly unfathomably feat back in March.
  • Real estate equities have been among the biggest winners of the reopening rebound. Equity REIT ETFs gained another 10.9% this week, led by a 50% surge from mall REITs.
  • The U.S. housing sector has foretold the emerging consumer-led rebound for several weeks. High-frequency data continues to indicate that the housing industry will be an early leader of the post-pandemic recovery.
  • This idea was discussed in more depth with members of my private investing community, iREIT on Alpha. Get started today »

Real Estate Weekly Outlook

U.S. equity markets extended their reopening rally this week amid signs that the post-pandemic economic rebound has formed the early contours of a V-shaped recovery following data that showed a stunning rebound in employment growth in May following a dismal March and April. The seemingly relentless equity market rally that pushed several major indexes to new record highs was juxtaposed with scenes of violence and unrest in the streets of many major U.S. cities and the receding coronavirus pandemic which was relegated out of the headlines for the first time in months as states and countries around the world continue to accelerate economic reopenings.

real estate news

(Hoya Capital Real Estate, Co-Produced with Brad Thomas)

Closing more than 42% above its lows in late March, the S&P 500 ETF (SPY) added another 4.9% this week and is amazingly lower by just 1% for the year. The Nasdaq (QQQ), meanwhile, climbed to a new record high, a feat that was seemingly unfathomable amid the market chaos in late March. The bulk of the recent gains, however, have been driven by a rebound in the most-beaten-down segments of the equity market that were ravaged by the economic shutdowns. Real estate equities have been among the biggest winners of the sooner-than-anticipated rebound as the broad-based Equity REIT ETFs (VNQ) (SCHH) surged another 10.9% this week following last week's 7.0% gain, led by double-digit percentage gains from 11 of the 18 property sectors.

real estate investing

Indications of a potential V-shaped recovery have been brewing for several weeks now in the U.S. housing sector, as high-frequency housing data has been foretelling a stronger-than-expected consumer-led rebound in May. The Hoya Capital Housing Index jumped another 11.3% this week, led by a continuation of the rally in homebuilders and strength among residential REITs that reported stronger-than-expected rent collection metrics during

Hoya Capital Teams Up With iREIT

Hoya Capital is excited to announce that we’ve teamed up with iREIT to cultivate the premier institutional-quality real estate research service on Seeking Alpha! Sign-up for the 2-week free trial today! iREIT on Alpha is your one-stop source for unmatched Equity and Mortgage REIT coverage, Dividend ETF Analysis, High-Yield REIT Preferred Stocks & Bonds, real estate macroeconomic research, REIT and property-level analytics, and real-time market commentary.
hoya ireit ad

This article was written by

Hoya Capital profile picture

Alex Pettee is President and Director of Research and ETFs at Hoya Capital. Hoya manages institutional and individual portfolios of publicly traded real estate securities.

Alex leads the investing group Hoya Capital Income Builder. The service features a team of analysts focusing on real income-producing asset classes that offer the opportunity for reliable income, diversification, and inflation hedging. Learn More.

Analyst’s Disclosure: I am/we are long HOMZ, AMT, ARE, AVB, BXMT, DRE, DLR, EFG, EQIX, FB, FR, MAR, MGP, NLY, NHI, NNN, PLD, REG, ROIC, SBRA, SPG, SRC, STOR, STWD, PSA, EXR, AMH, CUBE, ELS, MAA, UDR, SUI, CPT, NVR, EQR, INVH, ESS, PEAK, LEN, DHI, HST, AIV, MDC, ACC, PHM, TPH, MTH, WELL. 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.

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. All commentary published by Hoya Capital Real Estate is available free of charge and is for informational purposes only and is not intended as investment advice. 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. Hoya Capital Real Estate advises an ETF. In addition to the long positions listed above, Hoya Capital is long all components in the Hoya Capital Housing 100 Index. Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (38)

Tellurium128 profile picture
Mall REITs stock rally defies logic. Their tenants arent paying their rents and the tenants customers want to burn down the stores and malls. On top of that there is no way in the world commercial real estate is worth what it was prior to covid and lenders are much more cautious lending to businesses now let alone retail properties and landlords which will be stuck with higher insurance costs because of the riots nd looting.
Half of the shelves in the few stores that are open now are empty and i now find myself going to amazon becuase im sick of driving around 3 or 4 locations to find what im looking for.
The whole retail sector stinks and i think mall REITs will fare the worst from here on.
Hoya Capital profile picture
Simon is still down 40% YTD while the other mall REITs are down upwards of 70%. The sector was essentially priced for bankruptcy in April, so the recent mall REIT rally doesn't seem to be entirely unjustified.
Diesel profile picture
REITs are going back to all time highs as I've been saying for the last couple months.
Long VTR to $60....easy $
fasthandssam profile picture
Riding MAC, SPG, and HT to the top!
Charlie's Munger profile picture
$SRG I booked ~ 50% gain last couple of weeks while you were being skeptical lol
Rob G. in Vegas profile picture
Not sure if you cover Plymouth Industrial REIT (PLYM), but they cut their quarterly dividend from $.375/share to $.20/share. Just an FYI. It was a good move, as the company was not funding it with AFFO.

The one and only industrial REIT so far that has cut.
Hoya Capital profile picture
Thanks, @Rob Grande. Somehow missed that in PLYM's earnings report, appreciate it!
Fernando1984 profile picture
Let's go $SRG
You can say that riots is a very visible sign that the lockdown is over. Lockdown was prohibition of assembly, and here finally during the riots people assemble freely like always before and no one is thinking of COVID once again, neither the rioters nor the government So we can well argue the market is up thanks to the riots.
In addition, one mass hysteria, the virus hysteria is supplanted by another mass hysteria, antiracism, antifa and equality mass hysteria. The latter one is not so threatening to business as not all businesses are looted now, while all businesses had to remain closed during the lockdown. So thanks to the antifa, US is finally open for business, contrary to what they were planning!
sbrn profile picture
I’m a nurse by profession. I worked my ass off taking every extra shift I could for years. I paid off 107k in student loans. I was so broke that I couldn’t even afford to go out and grab a drink with my friends for years. I also have a debilitating auto immune disease that started 10 years ago. I never thought I’d see the day when that turned around, but I kept trying regardless.

Because of my “job security,” even though my hours were cut during this crisis, I kept investing, and primarily in the unnecessarily beaten down reits you write about.

I finally feel like I’ve gotten to the point where I have an edge in life, despite everything. I now have monthly income, that I’ll never sell, and feel comfortable finally starting a family.

Thank you for your articles. They really helped me, and I sincerely mean that.
this is the most inspiring post i have ever seen in SA. amazing.
Hoya Capital profile picture
Really appreciate it, @sbrn. Keep up the great work and fighting the good fight!
Guy at Work reading SA profile picture
@sbrn - I can't help but feel sorry for you. You dedicate your life to helping others, getting screwed over in the process. I'm an RT living in Canada, graduated at 20 with NO DEBT and a degree in health sciences, this is Canada where it makes sense to go to school to help others. Couldn't imagine being a healthcare worker in the states, where they make you work with vulnerable patients without PPE. Every single year, I'm so much more thankful to be Canadian. Can't help but feel sorry for the states as a whole now...
Guy at Work reading SA profile picture
V shaped recovery? Nasdaq says so but not the employment numbers don't. I'm thinking it's another good time to raise cash.
Just remember unemployment numbers are backwards looking lagging indicators.
Hoya Capital profile picture
@Guy at Work reading SA Certainly reasonable to believe there's more craziness in store for the rest of 2020.

The range of estimates for full-year GDP growth for 2020 is as wide as it's ever been. At this point, it's not out of the realm of possibility that we'll see *positive* growth in 2020 and perhaps to a large degree.

Even without considering any sort of Keynesian multiplier effect we're adding $3-5 trillion in stimulus to a $20 trillion economy that may have only lost $1 trillion or less in aggregate real output from the coronavirus shutdowns.
Great summary of the V-shape in progress.
The question is whether such a rally can sustain in the next few weeks/months?
Is the fundamental finally changed?
Thank you for your always informative weekly REIT reports, Hoya Capital.

Retired income investor
Hoya Capital profile picture
Thanks, glad you enjoyed @usiah.
This is welcome news. But let's wait at least until mid-fall to talk seriously about a V-shaped recovery. We will know more about the pandemic's lasting impact on the unemployment rate and on GDP by then too.
Hoya Capital profile picture
Thanks, @Skeptical Sam and I agree that the recovery will certainly be uneven and that surely some permanent damage has been done.

We're been pretty consistent that *if* the shutdowns last for weeks rather than months (as it appears to be the case at this point), the permanent economic damage *can* be minimized but not entirely eliminated.
stvgeue profile picture
Also, In a couple of weeks we will have an idea how lack of social distancing during mass protests effects uptick in transmissions or outbreaks. A really positive report would indicate a smoother recovery especially in light of the fact that a vaccine is being expedited.
Unfortunately, reports from the department of labor indicate that there was a mis categorization of some of the data and the real unemployment number is around 16%. I suspect that the data will be corrected this week and the market may not be quite so exuberant. I used Friday to trim positions and take double digit gains across the board. I expect the market will experience significant volatility as economic numbers vary. However, it's a market of stocks so there is usually opportunity.
Ah yes I recall how the unemployment numbers dramatically fell right before the re-election of O. It was an impossible improvement and of course the media mostly ignored it.
Current numbers had nothing to do with Trump just like the former had nothing to do with Obama. I don’t believe labor dept was corrupted in either case. One can differ with their data collection, but there’s no political conspiracy at labor.
Hoya Capital profile picture
@retbiotech1 Unfortunately I'm seeing this misinformation spread, citing a Washington Post article that will likely be retracted once it has already its intended effect of seeding doubt in data that is politically inconvenient. A sad state of modern journalism, but that's a whole separate issue.

The data will not "be corrected this week." The BLS runs two separate surveys in the nonfarm payrolls report: the establishment survey and the household survey. The "headline" number of job growth comes from the establishment survey while the unemployment rate comes from the household survey.

The BLS has been transparent about potential classification/coding issues of COVID-related layoffs on the household survey. This occurred both in April and May. The U3 UR would have been at 19.7% in April then fallen to 16.4% in May if the workers who were recorded as employed but absent from work due to "other reasons" (over and above the number absent for other reasons in a typical May) had been classified as unemployed on temporary layoff.

Bottom line, it's extremely disappointing that many folks that *should* know better (including a Nobel laureate) are using this situation in bad faith to challenge the legitimacy of the BLS.
This is all good but what about the coming correction of 4.9 million uncounted unemployed! What about the eminent resurgence of Covid! Florida cases are booming just weeks after reopening! I warned several people to ignore that phoney jobs report only because the data is useless at this point in time! You are going to have a correction Monday of a 2.8 million job loss, what then?
Hoya Capital profile picture
Respectfully, it's hard to tell if this is sarcasm/parody.
housedr profile picture
Asteroid to strike Wed.
something that is phony; a counterfeit or fake. an insincere, pretentious, or deceitful person: He thought my friends were a bunch of phonies.

do you prefer potato or potatoe

sorry you missed out. If what you say is true the cnbc gang will all over it as they have your agenda too
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

Related Stocks

SymbolLast Price% Chg
American Eagle Outfitters, Inc.
AGNC Investment Corp.
Ashford Hospitality Trust, Inc.
Ashford Hospitality Trust, Inc. PFD D 8.45%CUM
Ashford Hospitality Trust, Inc. PFD CUM SER F

Related Analysis

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.