REIT shares slump in 2017 following short rally

So far this year, the S&P U.S. REIT Index has dropped 1.3 percent

Miami /
May.May 24, 2017 02:15 PM

From TRD New York: U.S. real estate investment trust shares declined in 2017, after a brief post-election spike.

So far this year, the S&P U.S. REIT Index has dropped 1.3 percent, the Wall Street Journal reported. Last year, it rose 4.2 percent. The S&P 500 stock index, however, jumped 6.9 percent this year, following a 9.5 percent increase in 2016.

Higher interest rates make it more expensive for REITs to borrow, and investor concern meant REITs saw few gains in the past two years. After the election, however, REIT shares jumped because of anticipation over fewer regulations and fiscal stimulus.

But with interest rates on the rise, and fears that commercial real estate is declining, REIT shares are trending down. There are also concerns about the impact a possible “border tax” will have on sectors that are exposed to trade and the strength of the U.S. dollar, like retail and lodging REITs.

“While corporate profit growth recently turned positive again, hotel fundamentals haven’t yet seen a boost in business demand,” Lukas Hartwich, an analyst at real estate research firm Green Street Advisors, told the Journal. He said, however, demand may pick up through summer as corporate profits gain.

Data center landlords performed better than retail and industrial REITs, according to the newspaper, with investors expecting higher earnings from tenants expanding the ability to host online traffic and mobile transactions.

Trump’s plan to bring down the corporate tax rate to 15 percent may also make REITs a less attractive investment option than before.

In March, The Real Deal ranked the major shareholders of New York City’s REITs.  [WSJ]Miriam Hall


Related Articles

arrow_forward_ios
Donald Trump, Eric Trump and Donald Trump Jr with 1125 South Ocean Boulevard (Premier Estate Properties, Getty)
Trump’s Palm Beach estate listed for rent asking $208K a month
Trump’s Palm Beach estate listed for rent asking $208K a month
A photo illustration of prominent guests at the Witkoff wedding (via Instagram)
Nuptials Mar-a-Lago style: Donald Trump, Don Peebles, Barry Sternlicht among real estate elite at Witkoff wedding
Nuptials Mar-a-Lago style: Donald Trump, Don Peebles, Barry Sternlicht among real estate elite at Witkoff wedding
Donald Trump and Grant Cardone (Cardone Enterprises)
Presidential surprise: Donald Trump kicks-off Grant Cardone’s 10X Growth Conference
Presidential surprise: Donald Trump kicks-off Grant Cardone’s 10X Growth Conference
Donald Trump and The Mar-a-Lago Club in Palm Beach (Getty Images, LoopNet, iStock/Illustration by Steven Dilakian for The Real Deal)
Trump’s toilet triumph: Guests of the former No. 1 will have more places to go No. 2
Trump’s toilet triumph: Guests of the former No. 1 will have more places to go No. 2
Eric and Lara Trump with 502 Bald Eagle Drive in Jupiter (Getty, Google Maps)
Trump town: Eric and Lara buy home near Don Jr. in Jupiter
Trump town: Eric and Lara buy home near Don Jr. in Jupiter
Fontainebleau Miami Beach, Jeffrey Soffer and former President Donald Trump (Ebyabe/Wikipedia, Getty, iStock)
Gambling portability a no-go in Florida this year for Jeffrey Soffer, Trump
Gambling portability a no-go in Florida this year for Jeffrey Soffer, Trump
Gil Dezer (Photos by Sonya Revell)
The Closing: Gil Dezer
The Closing: Gil Dezer
Brad Parscale and 2319 Desota Drive (Getty, Google Maps)
Brad Parscale, ex-Trump campaign manager, sells Fort Lauderdale home
Brad Parscale, ex-Trump campaign manager, sells Fort Lauderdale home
arrow_forward_ios

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

Loading...