On Friday, Citi Research led off its Weekly REIT and Lodging Report with a 'cheat sheet' for investors looking to play the odds on "earnings roulette."
How could this information be valuable?
According to Citi, "Over the last 3 years, REITs that out- or underperform the index on the day of their release do so by about ~130bps. Over an almost 10-year time frame, this rises to ~180-190bps, which is inclusive of the more volatile 2008/2009 period."
Here is a quick overview, as REIT 2Q15 earnings are now beginning to pick up momentum between now and the first week of August.
Historic Outperformance
Mall REIT - Simon Property Group SPG $56.6 billion cap, 3.3 percent yield.
Office REIT - Boston Properties BXP $19.25 billion cap, 2.1 percent yield.
• http://www.benzinga.com/analyst-ratings/analyst-color/15/07/5668651/goldman-sachs-updates-the-big-3-office-reits
Historic Underperformance
Shopping Center REIT - Inland Real Estate Corp. IRC $995 million cap, 5.75 percent yield.
Healthcare REIT - HCP Inc. HCP $17.4 billion cap, 6 percent yield.
Top Performers - Last 3 Years
Regency Centers REG $5.9 billion cap, 3.1 percent yield - (Shopping Center).
DCT Industrial DCT $3 billion cap, 3.3 percent yield - (Industrial/Warehouse).
CorSite Realty COR $2.3 billion cap, 3.5 percent yield - (Data Center).
FelCor Lodging Trust FCH $1.54 billion cap, 1.5 percent yield - (Hotel).
Hersha Hospitality Trust HT $1.5 billion cap, 1 percent yield - (Hotel).
Lagging Performance - Last 3 Years
HCP Inc. makes this list as well, along with:
Mack-Cali Realty CLI $1.7 billion cap, 3.1 percent yield (Suburban Office/Multifamily).
Home Properties Inc. HME $4.25 billion cap, 4.15 percent yield (Multifamily).
Government Properties GOV $1.34 billion cap, 9 percent yield (Office).
http://www.benzinga.com/analyst-ratings/analyst-color/15/06/5570759/stifel-upgrades-mack-cali-realty-expects-big-changes-fro
However, Citi believes that Home Properties and Mack-Cali "…will move out of the basement" this quarter. Notably, HME is the subject of a takeover; and CLI has a new management team in place, which Citi believes "…should improve communication, expectations management and results."
Investor Takeaway
Long-term REIT investors typically do not pay attention to short-term price moves, unless there has been a change to their underlying investment thesis.
However, investors looking to establish a new position, or to rebalance an existing portfolio, can also benefit from being aware of these trends noted by the REIT analysts at Citi Research.
Market News and Data brought to you by Benzinga APIs© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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Posted In: Analyst ColorEarningsNewsREITPreviewsAnalyst RatingsTrading IdeasGeneralReal EstateCiti Research
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