Displaying items by tag: reits

Real estate investment trusts, known as REITs, are renowned for their attractive dividend yields, as they are legally obligated to distribute 90% of their post-tax earnings to shareholders. However, REITs are highly sensitive to various market factors such as interest rates, inflation, leverage, and regulatory changes, posing liquidity concerns for investors.

While dividend yield is crucial, conservative investors also consider factors like analyst ratings and liquidity when evaluating REITs. The highest-yielding REITs, according to Rick Orford, based on specific criteria, including annual dividend percentage, trading volume, number of analysts, and current analyst ratings are Vici Properties, showcasing notable revenue growth and offering a promising dividend yield of 5.71%. Starwood Property Trust, recognized as the largest commercial mortgage REIT in the US, presents a forward yield of 9.81%, notwithstanding mixed financial performance in 2023. Redwood Trust emerges as a standout contender with the highest forward yield of 11.24% and an optimistic outlook for future earnings growth, bolstered by its diversified investment portfolio.

Finsum: If interest rates have peaked REITs are poised to deliver huge returns in 2024 and 2025.

According to analysis by S&P Global Market Intelligence, U.S. equity REITs have little direct exposure to Silicon Valley Bank, which had the second-largest bank failure in U.S. history. Office REIT Cousins Properties Inc. reported Silicon Valley Bank as its ninth-largest tenant by annualized rent as of 2022 year-end at just over $8.4 million, or roughly 1.2% of the REIT's total rental portfolio. The REIT leases 204,751 square feet of office space to the bank at its Hayden Ferry property in Tempe, Arizona. Boston Properties Inc. houses Silicon Valley Bank's Seattle office in its recently acquired Madison Centre property. In addition, Paramount Group Inc. leases office space to SVB Securities LLC, an entity under the SVB Financial Group umbrella, at 1301 Avenue of the Americas in Manhattan, N.Y. Alexandria Real Estate Equities Inc. reported in a March 13th news release that it has one lease with an affiliate of Silicon Valley Bank in the Greater Boston area market totaling 32,152 rentable square feet. The lease's annual rental revenue as of Dec. 31st, 2022, was $1.7 million, or 0.08% of the REIT's total annual rental revenue.

Finsum:According to S&P Global Market Intelligence, U.S. REITs had limited exposure to Silicon Valley Bank, with some REITS reporting that SVB made up a small percentage of their rental portfolios.

According to Nareit, an organization that represents the REIT industry, REITs posted their best monthly returns since January 2019 and outperformed the broader markets. The FTSE Nareit All Equity REITs index jumped 10.1% while the FTSE Nareit Equity REITs index rose 10.7%. Those figures compare favorably to the 7.0% gain of the Dow Jones U.S. Total Stock Market and the 6.7% gain for the Russell 1000. The strong returns came as a result of investor optimism stemming from the widely expected belief that the Federal Reserve will pivot from its rate hiking cycle as inflation slows. In addition, REIT operational performance continues to be strong. For instance, REITs reported a new all-time high of $19.9 billion in funds from operations in the third quarter of 2022 according to Nareit’s T-Tracker. During January, all property sectors had a positive performance. The top sectors include lodging/resorts with a 17.1% gain, industrials which rose 13.7%, and data centers at 13.2%. Even the laggard sectors were positive, with retail rising 7.4% and infrastructure gaining 6.8%. Global real estate markets also performed strongly with the FTSE EPRA Nareit Developed index gaining 9.0% compared to a 7.3% gain for the FTSE Global All Cap. In terms of regions, Developed Europe led with a return of 10.8%, followed by North America at 10.7%, and Developed Asia at 3.7%.

Finsum:REITs posted the strongest monthly performance since January 2019 as investors remain optimistic that the Fed will slow its rate hiking policy and REIT operational performance remains robust.

According to data compiled by S&P Global Market Intelligence, ninety-nine U.S.-based publicly traded REITS announced increases to their dividend payments last year, representing about 61.5% of the entire U.S. REIT industry. The self-storage industry reported the highest percentage of dividend hikes relative to the sector's total, with 83.3% announcing dividend increases during 2022. The industrial sector placed second, with 81.8% increasing dividends. The retail industry had the biggest number of REITs that announced dividend hikes last year at 25, 80% of all retail REITs. In addition, close to 70% of U.S. REIT dividend hikes in 2022 surpass pre-COVID payouts. In fact, 68 out of 99 U.S. REITs that announced dividend hikes last year posted higher regular dividend payouts by year-end when compared to dividends in 2019. However, 27 were still paying lower dividends relative to their 2019 dividend payments. This included four hotel REITs that only reinstated their dividends last year after suspending payouts in 2020 and 2021. The remaining 4 had not started trading yet on a major exchange in 2019. In terms of the highest percentage jump in dividends, Service Properties Trust, which focuses on hotels, led all U.S. REITs with year-over-year dividend payout hikes last year. The company raised its quarterly cash dividend to 20 cents per share on Oct. 13, from a 1-cent-per-share paid during the fourth quarter of 2021. However, its current dividend is still below its pre-COVID dividend of 54 cents per share.

Finsum:Over 60% of U.S. REITs announced increases to their dividend payments in 2022, led by the self-storage industry, the industrial sector, and the retail industry.

KKR has become the latest non-traded REIT to limit redemptions. The company revealed in a regulatory filing this week that investors sought to withdraw more than 8% of KKR Real Estate Select Trust’s (KREST) $1.6B in assets during the past three months. KKR said the KREST redemption requests far exceeded its 5% quarterly limit in the past three months. Barron’s reported that the company wrote in its filing that the REIT limited withdrawals to 62% of requests. This follows news last month that the Blackstone Real Estate Income Trust (BREIT) and the Starwood Real Estate Income Trust (SREIT) limited withdrawals after quarterly and monthly redemption limits were breached. Investors have been running for the exits at non-traded REITs, triggering withdrawal limits the REITs use to prevent them from having to make forced sales. The non-traded REITs say they need redemption caps to protect investors because their corporate real estate (CRE) assets typically have limited liquidity. In the regulatory filing, KREST CEO Billy Butcher said “Within KREST, we are balancing providing access to private real estate, which is an illiquid asset class, with the recognition and understanding that regular liquidity is an important feature for KREST shareholders.”

Finsum:KKR becomes the latest non-traded REIT to limit redemption requests to maintain liquidity.