• U.S. equity markets rallied Friday- pushing the major benchmarks to the second week of gains- as a mixed slate of earnings reports and lukewarm economic data raised hopes for a "soft landing."
• Finishing the week with gains of nearly 4%, the S&P 500 advanced 2.5% today while the tech-heavy Nasdaq 100 rebounded with 3.1% gains to end the week with 2% gains.
• Real estate equities were upside leaders throughout the week with Equity REITs gaining 2.2% today- and over 6% on the week while Mortgage REITs rallied 3.3% today- and 10% this week.
• Another day, another handful of REIT dividend hikes. Mall REIT Macerich (MAC) surged nearly 8% after hiking its quarterly dividend by 13% to $0.17/share. We've now seen 120 REITs raise their dividend this year - matching the full-year record-high total from 2021.
• CubeSmart (CUBE) - which we own in the REIT Dividend Growth Portfolio - rallied more than 6% today after it boosted its full-year FFO growth target to 19.0% - up 100 basis points from last quarter - and its NOI growth target to 16.0% - up 50 basis points.

Income Builder Daily Recap

U.S. equity markets rallied Friday - pushing the major benchmarks to the second week of solid gains - as a mixed slate of corporate earnings reports and lukewarm economic data raised hopes of a "soft landing." Finishing the week with gains of nearly 4%, the S&P 500 advanced 2.5% today while the tech-heavy Nasdaq 100 rebounded with 3.1% gains to end the week with gains of roughly 2%. The Mid-Cap 400 and Small-Cap 600 each advanced more than 5% on the week. Real estate equities were upside leaders throughout the week driven by a solid slate of earnings results and lifted by a retreat in longer-term interest rates. The Equity REIT Index finished higher by 2.2% today - and more than 6% on the week while the Mortgage REIT Index gained 3.3% today to push its weekly gains to over 10%.

Stabilization in long-term interest rates amid evident signs of cooling inflationary pressure in corporate earnings results and in soft economic data this week sparked a bid across both U.S. equities and bond markets. Cooler-than-expected Core PCE Inflation data - the Fed's most closely-watched inflation gauge - along with weak Pending Home Sales data and a downbeat prognosis on U.S. consumer spending trends from Amazon (AMZN) kept downward pressure on the 10-Year Treasury Yield today, which closed the week at 4.01% - well below its recent intra-day highs of 4.30% last week. 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 this weekend.

Real Estate Daily Recap

Best & Worst Performance Today Across the REIT Sector

Today we published REIT Earnings Halftime Report. At the halfway point of earnings season, of the 41 REITs that have provided full-year Funds From Operations ("FFO") guidance, 28 REITs (67%) raised their outlook while just 4 REITs (10%) have lowered their outlook. Solid results from REITs come amid an otherwise disappointing earnings season for the broader equity market as, per FactSet, just 48% of S&P 500 companies have boosted their outlook. Upside standouts thus far have been Industrial, Shopping Center, and Apartment REITs. Sunbelt-focused office REITs have also surprised to the upside while the initial batch of results from Hotel and Healthcare REITs have been solid. While so far avoiding the downdraft from the "tech wreck" this earnings season, currency headwinds dragged on technology REITs.

Storage: CubeSmart (CUBE) - which we own in the REIT Dividend Growth Portfolio - rallied more than 6% today after it boosted its full-year FFO growth target to 19.0% - up 100 basis points from last quarter - and its NOI growth target to 16.0% - up 50 basis points. The first storage REIT to report results this earnings season, CUBE reported that it "continues to see solid demand across the portfolio as we returned to more normalized seasonal trends during the quarter." While the rate-driven slowdown in housing market activity is expected to temper incremental storage demand, we discussed our recent Storage REIT report that PPI data and interim REIT updates have indicated strong demand trends continued deep into the third-quarter.

Another day, another handful of REIT dividend hikes. Mall REIT Macerich (MAC) surged nearly 8% after hiking its quarterly dividend by 13% to $0.17/share. Community Healthcare (CHCT) advanced nearly 3% after raising its quarterly dividend by another 1%. We've now seen 120 REITs raise their dividend this year - matching the full-year record-high total from 2021.

Mortgage REIT Daily Recap

Per the REIT Rankings Tracker available to Income Builder subscribers, mortgage REITs continued to rally today as earnings results thus far have been significantly better than expected. PennyMac (PMT) surged more than 10% today after reporting that its Book Value Per Share ("BVPS") was lower by just 2.5% in the third quarter - the most muted decline among residential mREITs to report results thus far. Redwood Trust (RWT) advanced more than 6% after reporting a similarly better-than-expected report with a BVPS decline of just 5.6% in Q3. Ladder Capital (LADR) gained nearly 3% after reporting in-line results while Orchid Island (ORC) gained 2% after confirming its preliminary report that its BVPS dipped more than 20% in Q3. The earnings calendar heats up in the week ahead with results from two dozen mREITs.

Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 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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