Special REIT Dividends • Record Rent Growth • Inflation Ahead

Summary

• U.S. equity markets snapped a three-day rally ahead of a key CPI inflation report tomorrow morning which is expected to show the highest annual rise in consumer prices since 1982.
• Holding onto week-to-date gains of roughly 3%, the S&P 500 slipped 0.7% today while the Mid-Cap 400 declined 1.5% and the Small-Cap 600 retreated 1.6%.
• RealPage data showed that apartment occupancy hit a new all-time high of 97.5%. The annual increase in effective asking rents for move-in leases reached 13.9% in November, climbing at an.
• We also saw another handful of REIT dividend hikes over the last 24 hours. WP Carey hiked its dividend for the fourth time this year, Saul Centers hiked for the second time, and Lamar Advertising declared a special cash dividend.
• Small-cap homebuilder Hovnanian Enterprises (HOV) soared nearly 15% today after reporting strong earnings results and provided an upbeat outlook for 2022. HOV, which traded as low as $5.45 last October, is now trading above $120 amid a robust recovery.

Income Builder Daily Recap

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U.S. equity markets snapped a three-day rally ahead of a key CPI inflation report tomorrow morning which is expected to show the highest annual rise in consumer prices since 1982. Holding onto week-to-date gains of roughly 3%, the S&P 500 slipped 0.7% today while the Mid-Cap 400 declined 1.5% and the Small-Cap 600 retreated 1.6%. Real estate equities were lower as well despite positive dividend news as the Equity REIT Index declined 1.5% today with 18-of-19 property sectors in negative territory while Mortgage REITs slipped 0.6%.

Equity REIT & Homebuilder Daily Recap

Timber: Today, we published Timber REITs: Organic Dividend Growth as an exclusive report on the Income Builder Marketplace. Timber REITs - which were initially slammed at the outside of the pandemic - have come roaring back to life over the last twelve months, riding the red-hot housing market to the the strongest revenue growth of any real estate sector this year and have rewarded shareholders with significant dividend growth. Lumber prices had dipped nearly 70% from their early-summer peak to their lows in late-August, but have come roaring back over the past three months amid a housing industry reacceleration. In the report, we discussed our top pick in the Timber REIT sector and analyzed earnings reports and themes we're watching.

Homebuilders: On a related note, small-cap homebuilder Hovnanian Enterprises (HOV) soared nearly 15% today after reporting strong earnings results and provided an upbeat outlook for 2022. HOV noted that its FY21 revenues rose 18.7% Y/Y to $2.78B and it expects FY22 revenues to increase further to between $2.80B-$3.0B. After seeing its share price dip as low as $5.45 last August amid questions about its balance sheet and ability to weather the pandemic-related headwinds, HOV has roared back to life both operationally and at the share-price level, and is now trading above $120. 

Apartments: Fresh data from RealPage yesterday showed that apartment rent growth and occupancy set new records in November, defying the typical seasonal slowdown and was consistent with data from Apartment List earlier in the week. RealPage data showed that apartment occupancy hit a new all-time high of 97.5% in November, up 250 basis points from the long-term average of roughly 95% establish over the course of the past three decades. The annual increase in effective asking rents for move-in leases reached 13.9% in November, climbing at an all-time record pace.

Manufactured Housing: UMH Properties (UMH) announced a joint venture with Nuveen Real Estate (JRS) for greenfield development or acquisition of new manufactured housing communities with an initial capital commitment of up to $170M. UMH will have a 40% stake in the Joint Venture and serve as the managing member and operating member of the joint venture. UMH will earn customary fees associated with property and asset management.

We also saw another handful of REIT dividend hikes over the last 24 hours. Net lease REIT W. P. Carey (WPC) hike its dividend by 0.3% to $1.055/quarterly its fourth dividend hike this year. After the close today, shopping center REIT Saul Centers (BFS) hiked its dividend by 3.6% to $0.57/quarter, its second dividend hike this year. Also this afternoon, Lamar Advertising (LAMR) declared a special cash dividend of $0.50 per share and held its regular dividend steady at $1.00/quarter, which was raised earlier this year.

Mortgage REIT Daily Recap

Per the REIT Rankings Tracker available to Income Builder subscribers, residential mREITs declined 0.4% today while commercial mREITs slipped 0.8%. After the close this afternoon, Orchid Island (ORC) held its dividend steady at $0.065/month, representing a forward yield of 17.14% - the highest in the mREIT sector. The average residential mortgage REIT now pays a dividend yield of 9.42% while the average commercial mortgage REIT pays a dividend yield of 6.37%.

REIT Preferreds & Capital Raising

Per the REIT Preferred Tracker available to Income Builder subscribers, REIT Preferreds were lower by 0.09% today and are now higher by 8.45% on a price return basis and roughly 15% on a total return basis. Ellington Financial (EFC) priced its new 6.250% Series B Fixed-Rate Reset Cumulative Redeemable Preferred Stock, and plans to issue $4.4M shares at $25 par value for gross proceeds of $110M and will be listed on the NYSE under the symbol EFC-B later this week. Agree Realty (ADC) slumped 4.6% today after pricing a secondary common stock offering of 5M shares at public offering price of $68.15/share.

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.

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.

• Hoya Capital: Cannabis REITs: High On Dividend Growth
• Gen Alpha: Buy Amgen Before Everyone Else Does
• ETF Monkey: Anchor Your Bond Allocation With This Top Performer
• Sunday Investor: FDVV Is A Buy, Now Let Me Tell You Why
• Retired Investor: WIP ETF Should Be Renamed What Inflation Protection
• Philip Eric Jones: Picking A Winner In The Storage REIT Sector

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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