Tag Archive | "REITs"

The State Of REITs: June 2018 Edition

The State Of REITs: June 2018 Edition


In May, there was a strong negative correlation between REIT market cap and total return with micro cap REITs significantly outperforming.

The REIT recovery grew much stronger in May as all 20 REIT property types generated positive returns.

REITs outperformed the S&P 500, DJIA and NASDAQ for the 3rd month in a row.

Significant upside potential remains for REITs as the REIT sector still trades at a median 8.59% discount to net asset value (NAV).

Hotel REITs continue to outperform with an 11.21% average YTD total return.

REIT Performance

May was the best month for REITs thus far in 2018, with the average REIT returning 5.90%. This outpaced the S&P 500 (+2.16%), Dow Jones Industrial Average (+1.05%) and NASDAQ (+5.32%). After badly underperforming over the first 2 months of the year, REITs have outperformed the broader market in each of the last 3 months. REITs still lag well behind the broader market on total return year to date. This gap could close, however, if REITs continue their strong recovery. In this monthly publication, I will provide REIT data on numerous metrics to help readers identify which property types and individual securities currently offer the best opportunities to achieve their investment goals.

Source: Graph by Simon Bowler, Data compiled from SNL.com

In May there was a very strong negative correlation between market cap and total return, with large cap REITs significantly underperforming (+2.55%). Micro cap REITs, on the other hand, yielded a stellar 9.58% return. This very strong month was not enough, however, to overcome the dismal -11.48% average return of micro caps over the first 4 months of the year. As a result, micro cap REITs remain the worst performers YTD, with small cap and mid cap REITs leading.

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Retirement Security: As Interest Rates Retreat, Buy These REITs

Retirement Security: As Interest Rates Retreat, Buy These REITs

There are many things that investors can profit from in the markets. Changes in interest rate direction is one of them.

Have you considered upping your REIT exposure to take advantage of higher yield opportunities?

We’ll highlight several that may give investors a leg up in this sector.

They say a picture is worth a thousand words. With Wednesday’s massive retreat in the 10-year treasury yield, from 3.13% days ago, to just 3.02%, only four words are necessary. Rate retreat, REITs roar.

An 11 basis-point decline (a basis point is one hundredth of one percent) from 3.13% in such a very short time frame is massive by any description.

11 basis points/313 basis points = 3.51%

Fed’s Minutes Move The Bond Market

With the Federal Reserve’s minutes from their previous meeting expected to be released at 2 P.M. on Wednesday, expectations were that the Fed would raise rates again at their June meeting.

The previous meeting’s minutes indicates all Fed participants expected the economy to strengthen and inflation to rise in the coming months.

Krishna Memani, chief investment officer at OppenheimerFunds, said:

If we get any surprises, it would be on the accommodative side, but I don’t think that will happen.”

The Fed’s minutes serve as a window into the minds of the Fed governors, how they’re thinking about the strength of the economy. In their effort to stay ahead of inflation, these minutes are expected to show the Federal Open Market Committee on track to raise rates in June.

Everything appears to be going according to plan, with consumer prices rising 2% last month, the labor market continuing to tighten and unemployment at 3.9%, the lowest it’s been in 17 years.

Some analysts believe this points to rates rising on the short end, but flattening or even decreasing on the long end.

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