Real estate stocks fall despite Fed’s move to expand lending

REITs struggle as markets tumble after Congress fails to pass stimulus deal

TRD NATIONAL /
Mar.March 23, 2020 02:40 PM
REIT Stocks Fell Monday (Credit: iStock)
REIT Stocks Fell Monday (Credit: iStock)

Real estate stocks continued to tumble Monday, in some measures performing worse against the broader market, after Congress failed to pass a nearly $2 trillion stimulus package.

Markets closed lower even as the Federal Reserve announced taking bolder steps to prop up the country’s economy in the wake of the coronavirus pandemic with a plan to expand lending.

The S&P 500 fell 2.9 percent Monday, and the Dow Jones Industrial Average plunged another 3 percent, or 582 points. But real estate stocks also sank, with losses continuing to outpace the broader market.

The FTSE Nareit All REITs index, which tracks public real estate investment trusts, plummeted 5.3 percent. Nareit’s index for equity REITs — firms that own and operate properties — was down about 5.2 percent. Nareit’s index for mortgage REITs, which provide financing for income-generating real estate, appeared to suffer worse in response to the Fed’s actions, nosediving over 11 percent.

Major brokerage firms also were in the red: CBRE Group was down 12.9 percent; Cushman & Wakefield lost 6.5 percent; and Newmark Group’s stock declined 0.8 percent. At least one brokerage, however, did notch gains, as Realogy Holdings Corp closed at $3, up 7.9 percent.

The central bank on Monday said it would buy back commercial mortgage-backed securities, in addition to previously announced mortgage-backed securities. It also would provide up to $300 billion in new financing to boost the flow of credit to employers, consumers and businesses, among other measures.

Monday’s steps taken by the central bank appeared to not calm investors, who have been taking part in a broad-based equity sell-off for the past month on fears that the coronavirus pandemic will cause the global economy to grind to a halt. Investors also responded negatively last week, after the Fed slashed interest rates for the second time in a month and resurrected another credit-boosting program from the financial crisis.

Senators in Washington, meanwhile, have been deadlocked on passing a $1.8 trillion economic assistance package that would help the U.S. economy, lifting up industries like aviation, particularly hard hit by travel restrictions. The New York Times reported that Democrats argued that the proposal would serve as a bailout for big businesses, and they called for greater protections for the millions of workers set to be laid off as governments shut down businesses and public places to prevent the spread of the virus.

Write to Mary Diduch at [email protected]


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