Retail REIT Earnings • Dividend Hikes • Fed Pivot
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.
Summary
- U.S. equity markets declined for the fourth session out of the past five Friday while bond yields retreated as investors weighed central bank pivots towards tighter monetary policy and COVID concerns.
- Ending the week with cumulative declines of 2.3%, the S&P 500 slipped 0.9% today while the Mid-Cap 400 declined 0.2% and the Small-Cap 600 eked out a gain of 0.3%.
- Real estate equities outperformed once again today as the Equity REIT Index finished lower by 0.1% with 13-of-19 property sectors in positive territory while Mortgage REITs slipped 0.8%.
- Shopping Center REIT Urstadt Biddle (UBA) gained 1.3% after reporting strong earnings results and hiking its dividend for the second time this year. UBA noted that its FFO for FY 2021 was back in-line with pre-pandemic levels.
- City Office REIT (CIO) also hiked its dividend yesterday afternoon to $0.20/quarter, a 33% increase from its prior rate. After the close today, casino REIT Gaming and Leisure Properties (GLPI) declared a $0.24/share special cash dividend.
Income Builder Daily Recap
Last month we launched Hoya Capital Income Builder - the premier income-focused investment research service through Seeking Alpha Marketplace. We focus on real income-producing asset classes that offer the opportunity for diversification, monthly income, capital appreciation, and inflation hedging. If you're not already on board, try a free two-week trial.
U.S. equity markets declined for the fourth session out of the past five Friday while bond yields retreated as investors weighed central bank pivots towards tighter monetary policy and COVID concerns. Ending the week with cumulative declines of 2.3%, the S&P 500 slipped 0.9% today while the Mid-Cap 400 declined 0.2% and the Small-Cap 600 eked out a gain of 0.3%. The tech-heavy Nasdaq 100 dipped 0.5%. Real estate equities outperformed once again today as the Equity REIT Index finished lower by 0.1% with 13-of-19 property sectors in positive territory while Mortgage REITs slipped 0.8%.
Equity REIT & Homebuilder Daily Recap
Shopping Center: Urstadt Biddle (UBA) gained 1.3% after reporting strong earnings results yesterday afternoon for its fiscal year ending October 31st. UBA - which we own in the REIT Focused Income Portfolio - reported solid same-store NOI growth of 13.2% and noted that its FFO/share fully rebounded back to the pre-pandemic 2019 FFO in full-year 2021. UBA reported a solid accelerating in leasing volume and spreads, commenting that its "encouraged that the increased demand is leading to increased rents." UBA also hiked its dividend for the second time this year to $0.2375/share per quarterly, a 3.3% increase from its prior dividend of $0.2300, representing a forward yield of roughly 4.8%.
Single-Family Rentals: Today, we published Single-Family Rental REITs: Meet Your New Landlord. SFRs are one of the great success stories of the Modern REIT Era, becoming a "core" institutional asset class and quieting the critics that questioned their operating efficiency potential. Driving these efficiency gains, SFR REITs have been leaders in the Property Technology ("PropTech") revolution to reduce costs, increase renter satisfaction, and fuel accretive growth. Honed out of necessity, SFR REITs have leveraged emerging technologies like virtual house tours, Smart Homes, and fully digital relationships with tenants to achieve NOI margins that are nearly on par with multifamily REITs.
The wave of REIT dividend increases continued over the last 24 hours with four more dividend hikes and another special dividend announcement. In addition to the dividend hike from Urstadt Biddle (UBA), City Office REIT (CIO) also hiked its dividend yesterday afternoon to $0.20/quarter, a 33% increase from its prior rate. After the close today, casino REIT Gaming and Leisure Properties (GLPI) declared a $0.24/share special cash dividend.
Net Lease: Earlier this week, we published Net Lease REITs: Analyzing Inflation Risk. Despite a wave of dividend hikes and robust external growth, net lease REITs have been among the weakest-performing property sectors this year amid concerns over soaring inflation and rising interest rates. Thriving in the "lower for longer" macroeconomic environment that defined the 2010s, the new regime of higher inflation rates has raised questions about these REITs' ability to continue to outperform. We’ve developed a new Inflation Hedge Factor metric to measure the inflation-hedging characteristics and potential risks. We see recent underperformance as a buying opportunity, particularly for net lease REITs that provide better inflation protection.
Mortgage REIT Daily Recap
Per the REIT Rankings Tracker available to Income Builder subscribers, residential mREITs declined 1.3% today while commercial mREITs slipped 0.3%. Granite Point Mortgage Trust (GPMT) gained nearly 2% after holding its dividend steady and announcing an expanded stock buyback plan to an additional 2M shares. Ellington Financial (EFC) finished lower by 1% after reporting an estimated book value per share of $18.18 as of November 30, 2021, which was 0.9% below its BVPS at the end of October. Two Harbors (TWO) finished lower by 1% after holding its dividend steady at its current rate. The average residential mREIT now pays a dividend yield of 9.65% while the average commercial mREIT pays a dividend yield of 6.65%.
REIT Preferreds & Capital Raising
Per the REIT Preferred Tracker available to Income Builder subscribers, REIT Preferreds were higher by 0.06% today and are now higher by 8.00% on a price return basis and roughly 14% on a total return basis. Earlier this week, Sachem Capital (SACH) announced that it will issue a new exchange-listed bonds. SACH currently has a suite of three "baby bonds" which trade at an average current yield of roughly 7.0%. The Notes are expected to be listed on the NYSE American under the trading symbol “SCCD.”
We'll publish a full analysis and commentary of this week's developments in the real estate industry, as well as an analysis of the busy week of economic data in our Real Estate Weekly Outlook report published this weekend.
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.
We're excited to announce the launch of Hoya Capital Income Builder - the new premier income-focused investing service offered exclusively through Seeking Alpha Marketplace. We've assembled the top contributors and analysts from across Seeking Alpha and beyond including Gen Alpha, ETF Monkey, Retired Investor, Sunday Investor, and Alex Mansour.
Our focus is real income-producing assets that offer the opportunity for monthly income, diversification, and inflation hedging. Members gain complete access to our investment research and our suite of trackers and exclusive portfolios targeting premium dividend yields of up to 10%.
Start Your FREE Two-Week Trial
Analyst's Disclosure: I/we have a beneficial long position in the shares of RIET, HOMZ either through stock ownership, options, or other derivatives.
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.