These 3 REITs Just Jumped Higher On Earnings Beats

For several months, real estate investment trusts (REITs) have been hammered by rising interest rates, fears of recession and skepticism about REITs in the market.

But nothing turns a bear market slide around fast like earnings beats. And investors are happy to see that several REITs have reported quality earnings this past week.

Take a look at three REITs that suffered large declines in share price over the past few months, only to jump up in price after posting solid earnings that beat the Street.

Kite Realty Group Trust KRG is an Indianapolis-based retail REIT with 180 open-air and mixed-use properties from Vermont to California, comprising 28 million square feet of gross leasable space. Its strip malls are mostly anchored by grocery stores, and tenants include CVS, The Fresh Market, Best Buy, Burlington, Ross Stores and Costco Wholesale. Kite Realty had its IPO in 2004.

On Oct. 30, after the bell, Kite Realty Group reported its third-quarter operating results. Funds from operations (FFO) of $0.51 per share beat the estimates of $0.48 per share and was in-line with the third quarter of 2022. Revenue of $207.22 million beat the estimates of $201.38 million and was ahead of revenue of $200.31 million in the third quarter of 2022.

In addition, Kite Realty lifted its 2023 FFO guidance range from $1.96-$2.00 to $1.99-$2.03.

Kite Realty bolted 5.91% higher the next day on a stronger-than-normal volume of 2.9 million shares. It also closed at the high of the day and was up about one-third of a percent the following morning. Considering it was down over 10% in October before the earnings announcement, Kite Realty investors are pleased to see the third-quarter results. 

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Brightspire Capital Inc. BRSP is an internally managed New York-based mortgage REIT (mREIT) that supplies floating-rate capital to multifamily, office, hotel, retail and net-lease real estate investments, most often consisting of senior mortgage loans. Brightspire has about $4.5 billion in assets under management.

After the bell on Oct. 30, Brightspire Capital reported third-quarter operating results. Earnings per share (EPS) of $0.28 trounced the consensus estimate of $0.21 by 33% and was 12% above EPS of $0.21 in the third quarter of 2022. Revenue of $59.09 million beat the estimate of $29.36 by 101.24% and was 6.98% better than revenue of $55.23 million in the third quarter of 2022.

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These results are a vast improvement over the last four quarters, in which Brightspire had produced EPS of negative $0.06, $0.03, 0.03 and negative $0.16, leading to a payout ratio well over 100.

Brightspire leaped 2.72% higher the next day and was trading higher the morning after that. Before the earnings announcement, Brightspire had been in a funk since August, losing over 37% of its value. Brightspire's annual dividend of $0.80 yields 14.12%.

Franklin BSP Realty Trust Inc. FBRT is another New York-based mREIT that originates and manages a portfolio of commercial real estate debt investments that are secured by U.S. properties. Franklin also owns real estate it has acquired through foreclosures and deeds instead of foreclosure.

After the bell on Oct. 30, Franklin BSP Realty Trust reported its third-quarter operating results. EPS of $0.43 beat the consensus estimate of $0.40 and was 30.3% higher than FFO of $0.33 in the third quarter of 2022. Revenue of $62.39 million beat the estimate of $59.75 million and was 24.06% better than revenue of $50.29 million in the third quarter of 2022.

Shares rose 2.11% the next day and were trading about a half percent higher the following morning. Before the announcement, Franklin was down about 14% since September began. Franklin's annual dividend of $1.42 yields 11.26%.

While one or two days' prices don't necessarily portend a huge turnaround for a stock price, it should be noted that stocks usually perform well in the quarter following an earnings beat, especially if the earnings were significantly better than the estimates or improvements from previous year-over-year results.

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