Retail REIT Earnings • Dividend Hikes • Fed Pivot
REITs, ETF investing, Dividend Investing, Homebuilders
Seeking Alpha Analyst Since 2012
Real Estate • High Yield • Dividend Growth
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- 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
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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.
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Analyst's Disclosure: I/we have a beneficial long position in the shares of RIET, HOMZ either through stock ownership, options, or other derivatives.
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