BXMT - A REIT Revival: Earnings Recap

2025-03-03 11:00:00 ET

Summary

• A REIT Revival? Buoyed by much-needed relief on the interest rate front, REITs have outperformed the broader S&P 500 by 10 percentage points since the start of earnings season.
• While interest rates have been the "spark" to the REIT rebound over the past two months, a very solid slate of earnings results provided the much-needed fuel.
• In one of the strongest overall REIT earnings seasons in the past half-decade, two-thirds of REITs reported full-year FFO that exceeded guidance estimates.
• Dividend news was a notable positive highlight of REIT earnings season. We've seen 29 REITs raise their dividends this year - slightly ahead of last year's pacing at this time.
• REITs have delivered cumulative FFO growth of roughly 18% since the start of 2022, during which time REIT stock price performance is effectively flat, underscoring the relatively compelling valuations of REITs compared to the broader equity market.

REIT Earnings Scorecard

Over 200 U.S. REITs and homebuilders have reported fourth-quarter earnings results over the past six weeks, providing critical information on the state of the commercial and residential real estate industry. Buoyed by much-needed relief on the interest rate front, REITs have significantly outperformed the broader equity market this earnings season. The Equity REIT Index has rallied nearly 9% since earnings season began in late January, far outpacing the -3% decline from the broader S&P 500 . This rebound follows a nearly three-year "bear market" for real estate equities dating back to the start of the Federal Reserve's rate hiking cycle in March 2022 in which the REIT Index accumulated a staggering 50-percentage point underperformance versus the S&P 500 at the "bottom" in mid-January of this year. The REIT Revival over the past six weeks has corresponded to a sharp retreat in benchmark interest rates. Since closing at a 14-month high on January 13th at 4.80%, the 10-Year Treasury Yield has tumbled 56 basis points to 4.24%, reflecting a combination of easing inflation worries and signs of cooling global growth....

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