The Real Deal National

Charted: How real estate stocks have performed so far this year

Zillow and Boston Properties have been steady risers this year
By Sylvia Varnham O’Regan | August 01, 2019 07:30AM

(Credit: iStock)

(Credit: iStock)

On Wednesday, the Fed announced it would lower interest rates for the first time since 2008.

The announcement, which experts predict could make real-estate deals more profitable, followed a strong year to date for stocks in the sector. By mid June, a quarter of the 32 real-estate companies on the S&P 500 were reportedly trading at their highest levels in the past year. In July, after Federal Reserve Chairman Jerome Powell hinted at a possible cut, there was another uptick.

“Interest rates have come down and that’s kind of helped the whole sector, except it hasn’t really helped some of the brokers like Realogy and RE/MAX because home sales are still kind of flat but you’ve got this secular challenge with this influx of private capital that’s increased competition for agents,” said Jason Deleeuw, a senior research analyst at Piper Jaffray.

Sheila McGrath, a research analyst at Evercore, said real estate investment trusts had been pretty much keeping up with the broader market. “I think the improving interest rate outlook has helped sentiment towards the sector,” she said, adding that the mall sector had lagged overall, while the industrial sector had been strong.

Boston Properties, a REIT focused on office space, had a share price of $132.29 on July 29, which exceeded expectations, according to Sandler O’Neill analyst Alexander Goldfarb. It started the year with a stock price of $112.55.

On the residential side, Zillow’s stock has been climbing throughout the year, closing out at $49.16 on July 29, up from $31.43 on January 1. Realogy, whose tumbling stock price has been well documented, rallied in July following the announcement it was partnering with Amazon on a new lead generation program named “TurnKey.” But Matthew Bouley, a senior equity research analyst at Barclays who covers Realogy, said the announcement didn’t change the serious, underlying challenges facing the business.

“You’re going to need to see Realogy prove itself — and some of these new initiatives prove themselves — over at least a couple of quarters before you get investor sentiment back on your side,” he said.

In the commercial space, JLL’s stock performed well following an earnings boost in the first quarter, closing out July with a stock price of $142.8, TRD’s analysis showed.

Take a look below to see how the top real estate stocks have fared so far in 2019.

Owners/Investors

Brokerages

Technology