Major Casino Deal • REIT M&A • Apartment Dividend Hike (NYSEARCA:HOMZ)

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Summary

U.S. equity markets rallied for the second-straight day Tuesday amid further evidence that the Omicron variant may be less severe than feared and relief that a debt ceiling-standoff will be avoided.
Adding to gains of 2.0% yesterday and posting its strongest two-day gain this year, the S&P 500 gained 2.1% while the Mid-Cap 400 rallied 1.7% and Small-Caps gained 1.4%.
Casino REIT Gaming and Leisure Properties (GLPI) advanced roughly 1% today after it announced a major $1.8B acquisition of Live! Maryland, Live! Philadelphia and Live! Pittsburgh from Cordish.
Digital Realty gained 1.5% after it successfully listed Digital Core REIT as a standalone publicly traded vehicle on the Singapore Exchange, raising $960M. Equinix gained 2% today after it announced its expansion into Africa through a $320M acquisition of MainOne.
After the close today, apartment REIT Mid America Apartment Communities (MAA) hiked its dividend by 6.1%, one of 125 REITs that have raised their dividends this year.

Income Builder Daily Recap

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U.S. equity markets rallied for the second-straight day Tuesday amid further evidence that the Omicron variant may be less severe than feared and relief that a debt ceiling standoff is likely to be avoided. Adding to gains of 2.0% yesterday and posting its strongest two-day gain this year, the S&P 500 gained 2.1% today while the Mid-Cap 400 rallied 1.7% and the Small-Cap 600 advanced 1.4%. Real estate equities were broadly higher amid a busy slate of newsflow with the Equity REIT Index gaining 1.4% with 18-of-19 property sectors in positive territory while Mortgage REITs gained 1.3%.

For the second-straight day, all eleven GICS equity sectors were higher on the day with the Technology (XLK) and Consumer Discretionary (XLY) sectors leading to the upside. The 10-Year Treasury Yield climbed another 5 basis points today to close back near 1.50% after sliding to its lowest level since mid-September last week. Following strong gains from homebuilders over the past several trading sessions, property technology firms led the Hoya Capital Housing Index to fresh all-time highs today. After the close today, apartment REIT Mid America Apartment Communities (MAA) hiked its dividend by 6.1%, one of 125 REITs that have raised their dividends this year.

Equity REIT Daily Recap

Casino: Gaming and Leisure Properties (GLPI) gained 0.8% today after it announced a major $1.8B acquisition of Live! Maryland, Live! Philadelphia and Live! Pittsburgh from Cordish in which GLPI will own the real property assets and applicable long-term ground leases of the properties. Acquired at a 6.9% cap rate, the acquisition is GLIP's largest since acquiring the Ameristar from Pinnacle back in 2016. GLPI will enter into a new triple-net master lease with Cordish for Live! Philadelphia, and Live! Pittsburgh, as well a single asset lease for Live! Maryland. The master lease and single asset lease will have an initial term of 39 years, with a maximum term of 60 years inclusive of tenant renewal options. The initial annual cash rent for all three properties will be $125.0 million, with a 1.75% fixed yearly escalator.

Data Centers: While we still haven't seen the major M&A move that we've been expecting from the two data center giants, Equinix (EQIX) and Digital Realty (DLR) have been busy with smaller-scale M&A activity in recent months. Equinix gained 2% today after it announced its expansion into Africa through a $320M acquisition of MainOne, a West African data center and connectivity solutions provider. Meanwhile, Digital Realty gained 1.4% today after it successfully listed Digital Core REIT as a standalone publicly traded vehicle on the Singapore Exchange which will generate proceeds of approximately $960M, which will be used to pay down debt and to fund future investment activity.

Office: A handful of office REITs were also busy on the acquisition-front. City Office (CIO) gained 2% after it announced that it closed on its $150.0M acquisition of Block 23, an office building in downtown Phoenix, Arizona. Armada Hoffler (AHH) traded higher by 1% after it announced that it will acquire a 79% interest and an additional 11% economic interest in the 23-story mixed-use Exelon building in Baltimore, Harbor Point for $246M which is expected to close by the end of Q1 2022. Mack-Cali Realty (CLI) gained 1% after announcing it will rebrand itself as Veris Residential, reflecting the company's new strategic direction and corporate values as it transitions into a pure-play multifamily REIT. It will continue to trade on NYSE and will trade under the symbol, "VRE", effective December 10th.

Prisons: Today, we published Prison REITs: The Verdict Is In. GEO Group (GEO) announced last week that it's joining CoreCivic (CXW) in abandoning the REIT structure, concluding a tumultuous 8-years as REITs. Prison REITs were the worst-performing property sector since their REIT conversions in 2013 and consistently ranked at the bottom across performance metrics - particularly after their once-lucrative dividends were eliminated. Political hostilities aside, demand for private facilities- which have always been a "supplier of last resort"- has declined materially as incarceration rates in the U.S. revert towards the developed economy average.

Cannabis: Last Friday, we published Cannabis REITs: When They Go Low, We Get High. Riding a seemingly never-ending 'high' since emerging onto the scene in the mid-2010s, Cannabis REITs are far-and-away the best-performing REIT sector of the past half-decade as the budding industry thrives in the murky and often contradictory regulatory framework of legalized marijuana. Joining Innovative Industrial (IIPR), Power REIT (PW), and AFC Gamma (AFCG), a pair of newcomers will soon enter the pot party - Chicago Atlantic Real Estate (REFI) and Freehold Properties (FHP) - both operating as commercial mortgage REITs - similar to AFCG which went public in early 2021.

Mortgage REIT Daily Recap

Per the REIT Rankings Tracker available to Income Builder subscribers, residential mREITs advanced 0.9% today while commercial mREITs gained 0.4%. On an otherwise slow day of newsflow, New Residential (NRZ), Arbor Realty (ABR), and Redwood (RWT)led the way while Sachem Capital (SACH) lagged. The average residential mREIT now pays a dividend yield of 9.34% while the average commercial mREIT pays a dividend yield of 6.35%.

REIT Preferreds & Capital Raising

Per the REIT Preferred Tracker available to Income Builder subscribers, REIT Preferreds were higher by 0.25% today and are now higher by 8.22% on a price return basis and roughly 15% on a total return basis. In the capital markets today, Gaming & Leisure Properties (GLPI) announced a secondary offering of 7.7M common shares for total gross proceeds of $344.6M to fund its aforementioned acquisition of Live! Casinos.

Economic Data This Week

Inflation data highlights the economic calendar in the week ahead, headlined by the Consumer Price Index report on Friday as well as our first look at Consumer Sentiment data for December. Consumer confidence metrics have recorded a historic plunge since late summer as consumer price inflation soars. Consensus estimates call for a 6.7% annual rise in the headline CPI index, which would be the highest since June 1982. On Wednesday, we'll see JOLTS Job Openings data which is expected to show a record-high quantity of job listings in the U.S. as employers continue to scramble to find workers.

Income Builder Trending Reports

Below we highlight several of the most-read reports over the last 24 hours published by the Income Builder contributor team.

Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed, Hoya Capital is long all components in the Hoya Capital Housing Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

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