REITs, ETF investing, Dividend Investing, Homebuilders
Contributor Since 2012
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 Mansour, The 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.
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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.
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Our Real Estate Daily Recap discusses the notable news and events in the real estate sector over the last trading day and highlights sector-by-sector performance. We publish this note every afternoon at HoyaCapital.com and, by reader demand, occasionally on Seeking Alpha to cover significant news or outsized daily performance. Check out our website and join our mailing list to make sure you never miss the latest developments in the commercial and residential real estate sectors.
After snapping a six-week winning streak with modest declines last week, US equity markets resumed their rally on Monday, clawing back early-session losses. Shrugging off heightened geopolitical tensions after last week's airstrike on an Iranian general, the S&P 500 ETF (SPY) climbed by 0.4% while the Nasdaq ETF (QQQ) gained by 0.6%. After a "risk-off" rally in bonds at the end of last week, Treasuries were weaker on the day with the 10-Year Treasury Yield (IEF) finishing higher by 2 basis points to close at 1.81%. Coming off solid outperformance last week, the broad-based Real Estate ETF (VNQ) finished fractionally higher with nine of the fifteen major real estate sectors finishing the day higher, led by retail, healthcare, and office REITs.
Led by strong gains from the single-family homebuilders including gains of over 2% from Taylor Morrison (TMHC), Lennar (LEN), and KB Home (KBH), the Hoya Capital Housing Index climbed 0.4% on the day. Among equity sector-ETFs, Healthcare (XLV), Technology (XLK), and Consumer Discretionary (XLY) led the way on the day while the Materials (XLB), Energy (XLE), and Financials (XLE) sectors lagged. In 2019, REITs delivered their second-best year of the decade in 2019, delivering a total return of nearly 29%, falling just short of the impressive 31% return on the broad-based S&P 500, which was also the second-best year for that index of the decade.
Within the commercial real estate sector, struggling mall REITs CBL & Associates (CBL) and Washington Prime (WPG) were among the outperformers, along with office REIT Mack-Cali Realty (CLI), shopping center REIT Tanger Outlets, and storage REIT Iron Mountain (IRM). Hotel REITs were the laggards with Pebblebrook (PEB), Sunstone (SHO), and RLJ Lodging (RLJ) each lower by more than 2%. In notable REIT news, Prison REIT CoreCivic (CXW) announced that it closed on the 28-property portfolio acquisition for $83.2 million leased to the federal government. We discussed the prison sector last week in a hotly-debated report.
Today, we published a report on iREIT on Alpha that examined REIT performance trends over the last decade. Even as REITs have permeated into the mainstream, many of the traditional "style factors" and stock-picking techniques that work in other equity sectors haven't worked in the REIT space. Our analysis uncovered five "factors" which have exhibited the most notable outperformance. Headlined by the finding that lower dividend yielding REITs have consistently delivered stronger total return performance, we also uncovered a market cap "sweet spot" for outperformance and found that elevated share price valuations are actually associated with further outperformance, a finding that clashes with the traditional "value" factor. We will publish the report later this week on Seeking Alpha for non-subscribers.
As discussed in our Real Estate Weekly Outlook, employment data highlights next week's busy economic calendar, headlined by the BLS nonfarm payrolls report on Friday. Economists are looking for 160k in job growth following last month's blowout report, which saw an impressive 266k jobs added in November. Average hourly earnings are expected to increase by 3.1%, in line with last month, while the unemployment rate is expected to stay steady at 3.5%.
Visit our website for free access to our full research library including coverage of Apartments, Homebuilders, Student Housing, Single-Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Shopping Centers, Hotels, Office, Storage, Timber, and Real Estate Crowdfunding.
Disclosure: 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.
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. 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.
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