• U.S. equity markets were mixed Wednesday while benchmark interest rates ticked higher as investors weighed another batch of generally-solid corporate earnings results against a drumbeat of hawkish Fed commentary.

• Maintaining its week-to-date gains of roughly 0.4%, the S&P 500 finished fractionally lower today, but the Mid-Cap 400 and Small-Cap 600 advanced by 0.2% and 0.1%, respectively. The Dow declined 80 points.

• Led by a rebound from office REITs, real estate equities continued their strong week ahead of a busy slate of earnings results this afternoon. The Equity REIT Index gained 0.5%.

• Following strong results from Prologis (PLD) earlier in the week, Rexford (REXR) and First Industrial (FR) reported very strong earnings results this afternoon, each raising their full-year FFO and NOI outlooks.

• Ahead of results from SL Green (SLG) and Brandywine (BDN), office REITs pushed their week-to-date gains to roughly 6%, rebounding this week as earnings results from large and regional banks relieved some concerns over office loan performance.

Explore hoya capital INVESTMENT RESEARCH

Income Builder Daily Recap

U.S. equity markets were mixed Wednesday while benchmark interest rates ticked higher as investors weighed another batch of generally-solid corporate earnings results against a drumbeat of hawkish Fed commentary. Maintaining its week-to-date gains of roughly 0.4%, the S&P 500 finished fractionally lower today, but the Mid-Cap 400 and Small-Cap 600 advanced by 0.2% and 0.1%, respectively. The Dow declined 80 points, while the tech-heavy Nasdaq finished lower by 0.1%. The 2-Year Treasury Yield climbed 4 basis points to 4.25%, while the 10-Year Treasury Yield added 3 basis points to 3.60%. Led by a rebound from office REITs, real estate equities continued their strong week ahead of a busy slate of earnings results this afternoon. The Equity REIT Index gained 0.5%, with 15-of-18 property sectors in positive territory, while the Mortgage REIT Index rallied 1.3%.

Real Estate Daily Recap

Best & Worst Performance Today Across the REIT Sector

Industrial: Following strong results from Prologis (PLD) earlier in the week, Rexford (REXR) and First Industrial (FR) reported very strong earnings results this afternoon. REXR raised its full-year outlook for Funds from Operations ("FFO") and same-store Net Operating Income ("NOI"), driven by incredible rental rate growth of 80% on a GAAP basis and 60% on a cash basis - an acceleration from Q4. REXR now sees FFO growth of 8.7% - up 150 basis points from its prior outlook - and sees NOI growth of 9.9% - up 10 basis points. FR raised its full-year FFO growth outlook to 4.4% - up 175 basis points from last quarter - and boosted its NOI growth outlook to 8.3% - up 25 basis points. FR noted that it achieved cash rental rate increases of 58.3% in the first quarter, its strongest on record. 

Office: Pushing their week-to-date gains to roughly 6%, office REITs have rebounded this week as earnings results from large and regional banks relieved some concerns over office loan performance. SL Green (SLG) and Brandywine (BDN) reported earnings results this afternoon. SLG reported that it leased 505k SF of space in Q1 and recorded a mark-to-market increase of 5.3% on these leases - both significant improvements from last quarter. SLG noted that its same-store cash NOI increased by 5.3% while its Manhattan same-store office occupancy was 90.2% - down from 91.2% last quarter, but reaffirmed its occupancy target 92.4% by December 31, 2023. BDN affirmed its full-year metrics, which call for same-store NOI growth of 3.5% at the midpoint, but anticipates a 15.9% in FFO this year. 

Casino: Today, we published Casino REITs: Benefiting From Blackstone Distress. A success story of the "Modern REIT Era," Casino REITs have been the best-performing property sector since their emergence in the mid-2010s, honing the competitive advantages of the public REIT model to rapidly consolidate the casino industry. Fittingly, the two casino REITs - VICI Properties (VICI) and Gaming & Leisure Properties (GLPI) exemplars in shareholder-friendly governance - have been beneficiaries of distress felt across the darker underbelly of the real estate industry, including Blackstone’s non-traded REIT ("NTR") platform. We compiled statistics on all of BREIT's major acquisitions since its inception and examined the performance of the closest comparable public REIT for each of the 14 deals. BREIT paid an average premium of 43% on its deals for publicly-listed companies, and 9 of the 14 deals are currently "in the red" based on public market comparables. We believe BREIT’s interest in the Cosmopolitan and the Bellagio - two of the five "in the money" deals - are among the most likely assets to be sold next.

In addition to the aforementioned reports, we'll hear results this afternoon from cell tower REIT Crown Castle (CCI) and tomorrow morning from net lease REIT Alpine Income (PINE). We'll publish our REIT Earnings Preview later this week. Below, we compiled the earnings calendar for equity REITs and homebuilders. (Note: Companies that have not yet confirmed an earnings date are in italics.)

Additional Headlines from The Daily REITBeat on Income Builder

• Braemar Hotels (BHR) finalized an extension of its $51.0 million mortgage loan for the 80-room Hotel Yountville for an additional 6 months

• Activist firm Blackwells Capital LLC issued a letter to shareholders regarding the "urgent need for boardroom change" at RTL

• Land & Buildings Investment Management issued an open letter to AIV’s Board of Directors urging the company to conduct a "full strategic review"

Mortgage REIT Daily Recap

Per the REIT Rankings Tracker available to Income Builder subscribers, mortgage REITs rebounded today, with residential mREITs gaining 1.0% while commercial mREITs rallied 1.9%. Franklin BSP Realty (FBRT) advanced 2% today after it announced the successful completion of the sale of the Williamsburg Hotel - a Brooklyn property that went into default in early 2021 - for $96 million, enough to cover the full principal amount of its loan and approximately $20 million of additional proceeds. Mortgage REIT earnings season kicks-off next Monday with reports from Dynex Capital (DX), KKR Real Estate (KREF), AGNC Investment (AGNC), and Seven Hills (SEVN).

Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds ("ETFs") 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.

Hoya Capital Research & Index Innovations (“Hoya Capital”) is an affiliate of Hoya Capital Real Estate, a registered investment advisory firm based in Rowayton, Connecticut that provides investment advisory services to ETFs, individuals, and institutions. Hoya Capital Research & Index Innovations provides non-advisory services including market commentary, 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 Real Estate. 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 Real Estate. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes.

Hoya Capital Real Estate and Hoya Capital Research & Index Innovations have no business relationship with any company discussed or mentioned and never receives compensation from any company discussed or mentioned. Hoya Capital Real Estate, 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.