Green Street



After a Brief Respite, REITs Resume Decline

From The Wall Street Journal:

Shares of real-estate investment trusts have slumped this year as a postelection sugar rush wears off.

The S&P U.S. REIT Index has fallen 1.3% so far this year. It rose 4.2% last year. Meanwhile, the S&P 500 stock index has risen 6.9% so far this year, after a 9.5% increase in 2016.

REITs have had a tough time for most the past two years as investors increasingly worried about rising interest rates, which make it more expensive for REITs to borrow.


Concerns about a potential “border tax,” meanwhile, are weighing on sectors that are more exposed to trade and U.S. dollar’s strength to other currencies, such as retail and lodging REITs.

“While corporate profit growth recently turned positive again, hotel fundamentals haven’t yet seen a boost in business demand,” said Lukas Hartwich, an analyst at real-estate research firm Green Street Advisors. He noted, however, that a pickup in demand could be seen in the summer as corporate profits continue to rise. Business travel accounts for three-quarters of demand of higher quality hotels that REITs own.


To read the full article from The Wall Street Journal, click here.