Real estate stocks rally after market correction

Comeback comes a day after Biden victories and interest-rate cut

TRD NATIONAL /
Mar.March 04, 2020 05:30 PM
REIT stocks, along with the rest of the market, rebounded a day after Super Tuesday (Credit: iStock)

REIT stocks, along with the rest of the market, rebounded a day after Super Tuesday (Credit: iStock)

Real estate stocks bounced back Wednesday after a rocky stretch triggered by the coronavirus outbreak.

The stock market as a whole rebounded Wednesday as the S&P 500 closed 4.2 percent higher a day after Democratic presidential candidate Joe Biden won 10 of the 14 primaries on Super Tuesday. The Dow Jones Industrial Average was up more than 1,170 points.

Public real estate investment trusts also ended on a higher note. Nareit’s All REIT Index closed 3.74 percent higher. According to Nareit, an industry group focused on REITs, all sectors were up.

“Today most of the names are participating in a rally in the REIT space, reversing a trend over the last couple of weeks,” said James Shanahan, a senior equity research analyst at financial services firm Edward Jones.

The market bump came after news of growing coronavirus outbreaks in several countries caused equities to plunge last week. REITs, typically viewed as defensive investments, also fell.

The only names that generally outperformed during the sell-off were data-center and cell-tower companies, Shanahan said. Retail and hotel firms were “significantly underperforming,” but other sectors, such as health care and residential REITs, also were not performing well, he added.

“In prior market corrections, we would’ve observed some buying in the REIT names, especially if the market sell-off happened concurrently with a decline in yield in the market,” Shanahan said.

The sell-off continued earlier this week, with investors appearing to react negatively to the Federal Reserve’s emergency interest rate cut — a move that at first briefly lifted markets.

The rate cut came in response to the novel coronavirus and the risks the respiratory illness it causes, COVID-19, poses to the economy. First reported in China in December, it has killed more than 3,200 people globally, stymied travel and led to shortages of supplies such as face masks and hand sanitizer.

“It just appears to us as though there was a lot of fear, and it led to somewhat indiscriminate selling of REITs and financial-services stocks in recent weeks,” Shanahan said.

Write to Mary Diduch at [email protected]


Related Articles

arrow_forward_ios
(iStock)

Remote work threatens cash flows for office REITs

Remote work threatens cash flows for office REITs
Jonathan Litt of Land & Buildings (Getty Images/iStock)

The Littmus test: Veteran activist investor on his office shorting strategy

The Littmus test: Veteran activist investor on his office shorting strategy
Jeff Bezos (Getty)

Here are the landlords benefiting from Amazon’s tech workforce expansion

Here are the landlords benefiting from Amazon’s tech workforce expansion
Jackpot: Cannabis REIT has $120M in capital to lend to operators

Jackpot: Cannabis REIT has $120M in capital to lend to operators

Jackpot: Cannabis REIT has $120M in capital to lend to operators
Business is booming for timber REITS, thanks in part to DIY home improvement projects. (Illustration by The Real Deal; iStock)

Timber REITs are having a mighty moment

Timber REITs are having a mighty moment
Critics say REIT stock buybacks aren’t working as planned, but while the pandemic has paused some such efforts, others have continued. 

Buyback blowback: REITs that repurchased stock now need cash

Buyback blowback: REITs that repurchased stock now need cash
Jonathan Litt of Land & Buildings (Getty Images/iStock)

Armed with a modest checkbook but a big pulpit, Jonathan Litt is going after Big Office. Can he prevail?

Armed with a modest checkbook but a big pulpit, Jonathan Litt is going after Big Office. Can he prevail?
Barry Sternlicht (Getty, iStock)

Barry Sternlicht on 1031s: Kill them

Barry Sternlicht on 1031s: Kill them
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...