Residential REITs indicate a positive outlook for FY21 on multifamily properties, single-family houses

Realtor looking for home. Real estate investment trusts REITs investing concept.
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  • At the REITweek Investor Conference, it was indicated that the REIT industry looks poised to be the beneficiary of the continuing economic recovery, with capital markets playing a constructive role in supporting that growth going forward.
  • As per real estate consulting firm, Hunter Housing Economics built-to-rent homes make up just over 6% of new homes built in the U.S. every year and is projected to double by 2024.
  • The firm adds that home builders have already bet billions on the sector, and will put down ~$40B more during the next 18 months.
  • Investors have been buying up single-family houses to rent out for some time, typically in disparate bunches in communities where most people own their homes.
  • Taylor Morrison Home (NYSE:TMHC) Mr. Wood’s development partner and the nation’s fifth-largest builder, has said built-to-rent could soon become 50% of its total business.
  • Among the many Residential REITs, Equity Residential (NYSE:EQR) sees significant improvement in its markets across the country as the pandemic eases; Q2 normalized FFO per share is seen at 67 cents to 71 cents, bringing its midpoint in line with the 69 cent average analyst estimate.
  • Essex Property Trust (NYSE:ESS) foresees the increase in open positions at big tech companies as a major factor for its multifamily properties growth on the West Coast; new lease rates in May increased 2% M/M.
  • American Homes 4 Rent (NYSE:AMH) continues to expect FY21 Core FFO at guidance midpoint of $1.27 vs. $1.28 consensus, 9.5% growth over prior year.
  • UDR (NYSE:UDR) expects Q2 FFO and AFFO per share to be at the high-end of its previously-provided guidance range of $0.47-$0.49.
  • Invitation Homes (NYSE:INVH) is on track to achieve its $1B+ acquisition target in 2021; targets 5-5 1/2% cap rate in the one-off space; Invitation also expects to sell ~1K homes in 2021; for sales INVH sells at ~3.5%-4% cap rate.
  • Mid-America Apartment Communities (NYSE:MAA) expects 2.5% - 3% Y/Y higher inventory in 2021; property revenue growth is seen between 1-3% while effective rent growth is seen ranging from 1.2-2.2%; FY21 core FFO is seen at $6.5 indicating a steady annual core FFO growth.

  • In the Healthcare REITs, Physicians Realty Trust (NYSE:DOC) estimates $400-$600M in 2021 total investments with 5-6% average first year cash cap rates while Welltower (NYSE:WELL) expects to achieve normalized FFO per diluted share to be in range of $0.75-$0.79 vs. earlier guidance of $0.72 - $0.77.
  • In the Hotel & Resort REITs, Ryman Hospitality Partners (NYSE:RHP) expects Q2 average monthly cash burn to be better than its previous estimate of $10M-$13M per month that it issued in early May and Pebblebrook Hotel Trust (NYSE:PEB) estimates positive adj. EBITDA for Q2.
  • ETFs Watch: Dow Jones REIT Indx Equity REIT Total Return Index (NASDAQ:REIT), iShares Residential Real Estate Capped ETF (NYSEARCA:REZ), ETF Series Solutions - Hoya Capital Housing ETF (NYSEARCA:HOMZ)

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