Real Estate Earnings Recap: Housing REITs Lead Recovery
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- Following several years of floundering stock price performance, REITs have outperformed in 2019, boosted by receding interest rates and strengthening property-level fundamentals.
- Residential REITs have led the recovery this year as an intensifying housing shortage has reignited rent growth, a result of strong household formations and slowing new construction.
- The 'REIT Rejuvenation' has restored the coveted NAV premium, giving these REITs the currency to re-open the acquisition pipeline which had essentially shut down since 2017.
- First-quarter earnings results were generally better-than-expected across most real estate sectors. Retail REITs, however, continue to struggle with a seemingly endless wave of store closings.
- As counterintuitive as it may be, we explain that elevated valuations are welcome news for REITs. We analyze REIT fundamental data from the recently released NAREIT T-Tracker data.
