REITs gain more than broader S&P 500 index on solid results, increased outlook

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REITs gained more in value this week than the broader S&P 500 index, helped by solid results and upgraded outlook.

The FTSE Nareit All Equity REITs index was up 6.43% W/W, while the Real Estate Select Sector SPDR ETF index grew 6.14%. Comparatively, the S&P 500 index increased only by 3.95% on a weekly basis.

Real estate investment trusts posted solid results, with 50 equity REITs and 20 mortgage REITs representing 50% of the total market capitalization reporting results, according to a recent report by Seeking Alpha.

Among the 41 REITs that provided their FY FFO guidance, 28 REITs, or 67%, raised their outlook. Just 4 REITs, or 10%, lowered their outlook, the report noted.

The outlook raise comes amid an otherwise disappointing earnings season for the broader equity market. Comparatively, only 48% of S&P 500 companies have boosted their outlook, the report said, citing FactSet.

Industrial REITs were the biggest gainers, having gained ~10 W/W.

Majority of the industrial REITs that reported this week, Prologis (PLD), First Industrial Realty Trust (FR), STAG Industrial (STAG) and Rexford Industrial Realty (REXR), posted a beat in revenue.

Residential REITs were a major laggard, gaining only 1.76%, amid continued signs of a slumping housing market.

Mortgage demand is at the slowest pace since 1997 as long-term rates crossed the 7% mark.

Housing starts data fell more than anticipated in September. The gauge of new home construction dropped 8.1% compared to the previous month, falling to a rate of 1.439M. The consensus number is 1.475M.

Hotel REITs, the biggest gainer last week, finished only just before the residential and timber subsectors, having gained a mere 4.24%.

Only a pair of hotel REITs have posted their complete Q3 results, and so the subsector missed out on the post-results gaining frenzy this week.

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