More Stimulus • Dividend Boosts • Jobless Claims Jump
REITs, ETF investing, Dividend Investing, Homebuilders
Seeking Alpha Analyst Since 2012
Real Estate • High 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 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.
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.
- U.S. equity markets finished mostly lower Thursday as investors awaited details on the stimulus plan from President-Elect Biden as employment data this morning showed continued choppiness in the economic recovery.
- Now lower by 0.7% on the week, the S&P 500 finished off by 0.4% today while the Dow declined by 69 points. Mid-Caps gained 1.0% while Small-Caps jumped 2.2%.
- Real estate equities outperformed for the second-straight day - led by the most beaten-down sectors of 2020. The Equity REIT ETF finished higher by 0.6% with 10-of-19 sectors in positive-territory.
- Tanger Outlets (SKT) jumped 9.6% after announcing that it will resume its suspended dividend at a rate of $0.1775/share dividend, which is roughly half of its prior pre-pandemic rate of $0.36 per share. Tanger remains one of the worst-performing REITs of the past five years.
- Initial Jobless Claims jumped to the highest level since August at 965k after showing signs of improvement in the prior three weeks. Driving this increase, the recently-enacted stimulus program provides an additional $300 per week in enhanced unemployment payments on top of state benefits.
Real Estate Daily Recap
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 on The REIT Forum and occasionally on our website and this Seeking Alpha blog to cover significant news and events. Subscribe to our free email list to keep up with the latest developments in the commercial and residential real estate sectors. Follow our real-time commentary on Twitter and LinkedIn.
U.S. equity markets finished mostly lower Thursday as investors awaited details on a fresh stimulus plan from President-Elect Biden as employment data this morning showed continued choppiness in the economic recovery. Now lower by 0.7% on the week, the S&P 500 ETF (SPY) finished off by 0.4% today while the Dow Jones Industrial Average (DIA) declined by 69 points. Real estate equities outperformed for the second-straight day - led by the most beaten-down sectors of 2020 - as the broad-based Equity REIT ETF (VNQ) finished higher by 0.6% with 10 of 19 property sectors in positive territory while the Mortgage REIT ETF (REM) finished higher by 0.9%.
While the large-cap indexes were under pressure, expectations of up to $2 trillion in additional stimulus lifted the Small-Cap (SLY) and Mid-Cap (MDY) to strong gains while Bitcoin (BTC-USD) also jumped another 5% today after an early-week sell-off. A strong day from housing-related retailers and financials lifted the Hoya Capital Housing Index to fresh record-highs. Seven of the eleven GICS equity sectors finished lower on the day, however, as the large-cap Technology (XLE) and Communications (XLC) sectors remain under pressure amid an ongoing social media censorship controversy while the Energy (XLE) sector continued its strong gains in 2021 after a brutal 2020.
Today's mixed performance followed disappointing employment data this morning as Initial Jobless Claims jumped to the highest level since August at 965k after showing signs of improvement in the prior three weeks. Continuing Claims ticked up to 5.27 from 5.07, but since the peak in early May at nearly 25 million, Continuing Claims have retreated by 19.5 million. Perhaps driving these increases, the recently enacted stimulus package provides an additional $300 per week in enhanced unemployment benefits on top of state benefits.
Commercial Real Estate
Malls: Tanger Outlets (SKT) jumped 9.6% after announcing that it will resume its suspended dividend at a rate of $0.1775/share dividend, which is roughly half of its prior pre-pandemic rate of $0.36 per share. Tanger provided a business update earlier in the week in which it reported that it collected 90% of Q4 rents and over 40% of the deferred rents due in 2021 had been collected. SKT noted that it has recorded positive cash flow across 2H20. As of Dec. 31, 2020, consolidated portfolio occupancy was 91.9% while traffic during Q4 represented roughly 90% of prior-year levels.
Net Lease: This afternoon, Agree Realty (ADC) officially switched from a quarterly to a monthly dividend payer, as announced earlier this week. In its inaugural monthly dividend, ADC declared a $0.207/share monthly, which was a modest boost from its prior quarterly rate of $0.62 per share. As we discussed in Income in the Yield Desert, no sector defied the retail and pandemic-related headwinds in 2020 more than the Net Lease REIT sector. Of the 52 equity REITs that paid higher total dividends in 2020, nine were net lease REITs. The NETLease Corporate Real Estate ETF (NETL) was one of the best-performing fund in the Morningstar Real Estate ETF Category in 2020.
Industrial: This afternoon, Monmouth Real Estate (MNR) declared a $0.18/share quarterly dividend, a 5.9% increase from prior dividend of $0.17, becoming the ninth industrial REIT to increase its dividend since the start of 2020. MNR concurrently announced that it has determined that Blackwell Capital's proposal to acquire MNR for $18.00 per share is not in the best interest of the company and it will explore strategic alternatives including the potential sale or merger of the company. While industrial REITs are likely to report average FFO growth near 10% in 2020, MNR has been a laggard.
Manufactured Housing: UMH Properties, Inc. (UMH) jumped 2.4% after it announced yesterday afternoon that it will increase its quarterly dividend to $0.19 per share up from $0.18 per share, the first dividend increase in fifteen years for the small-cap REIT. UMH joins the other two manufactured housing REITs, Sun Communities (SUI) and Equity Lifestyle (ELS), who have collectively achieved some of the strongest rates of dividend growth in the REIT sector over the past decade. In all, 52 equity REITs paid higher total dividends in 2020 than last year, led by residential REITs with 10 increases.
Cell Tower: Earlier this week, we published Cell Tower REITs: Tech Trouble or 5G Opportunity? We discussed how cell tower REITs outperformed the REIT Index for the sixth-straight-year in 2020, but have dipped nearly 20% over the last quarter amid the sharp vaccine-driven REIT sector rotation. We believe that Apple's (AAPL) successful iPhone 12 launch represents the true "arrival" of 5G, the much-anticipated next-generation mobile network. Powering this sector-leading AFFO growth has been a combination of external growth - underscored by American Tower's (AMT) buying spree in early 2021 - and by sector-leading "same-store" growth.
As tracked in our Mortgage REIT Tracker available to The REIT Forum subscribers, residential mREITs finished higher by 1.3% today and are now flat on the week. Commercial mREITs finished higher by 0.5% and are now higher by 0.6% on the week. This afternoon, Orchid Island Capital (ORC) declared a $0.065/share monthly dividend, in line with the previous rate. ORC, which was one of the better-performing mREITs in 2020, also provided a preliminary 4Q earnings report in which it noted that its book value per share at the end of December was $5.46, up 0.3% from its BVPS at the end of 3Q.
The iShares Mortgage Real Estate Capped ETF (REM) ended 2020 with total returns of -20.8%, but the market-cap weighted index hides some of the permanent scars of 2020 on a handful of mREITs. Using a simple average, among the 23 residential mREITs, the average price return in 2020 was -33.3%. Among the 18 commercial mREITs, the average price return in 2020 was -18.5%. Of the 41 mREITs in the NAREIT universe, just two paid higher dividends in 2020 compared to 2019, seven paid the same rate, while 32 paid lower dividends.
REIT Preferreds & Bonds
As tracked in our REIT Preferred Stock & Bond Tracker available to The REIT Forum subscribers, REIT Preferred stocks finished higher by 0.77% today, on average, but underperformed their respective common stock issues by an average of 1.45%. The REIT Preferred ETF (PFFR) ended 2020 with total returns of -0.2% and REIT preferreds are roughly flat through the first four days of 2021. The average REIT preferred trades at a 5% discount to Par Value and has an average current yield of 6.81%.
Economic Data This Week
After a jam-packed week of employment data, it will be another busy week of economic data in the week ahead headlined by the two major inflation reports. On Wednesday, we'll see Consumer Price Index data for December, and on Friday, we'll see Producer Price Index data. Inflation expectations surged last week after Democrats won the "trifecta" of political control given the implications for additional stimulus, and investors will be looking for signs of inflation in the hard data in the months ahead. We'll also see Retail Sales data for December on Friday. As usual, we'll also be watching the weekly Mortgage Applications and Jobless Claims as well.
Announcement: Hoya Capital Joins The REIT Forum
Hoya Capital is excited to announce that we’ve teamed up with The REIT Forum to bring the premier research service on Seeking Alpha to the next level. Exclusive articles contain 2-3x more research content including access to The REIT Forum's exclusive ratings and live trackers and valuation tools. Sign up for the 2-week free trial today! The REIT Forum offers unmatched coverage and top-quality model portfolios for Equity and Mortgage REITs, Real Estate ETFs and CEFs, High-Yield BDCs, and REIT Preferred Stocks & Bonds.
Join our Mailing List on our Website
The REIT Forum is the exclusive home to Hoya Capital premium research. Visit our website and join our email list for quick access to our real estate research library: HoyaCapital.com where we have links to all of our real estate sector reports and daily recaps. You can also follow our real-time commentary on Twitter, LinkedIn, and Facebook.
Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.
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. 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.
I am/we are long all holdings listed at www.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.