VNQ - Apartment REITs: Urban Exodus Until Vaccine

• The pandemic-driven "urban exodus" hasn't yet shown signs of slowing. Apartment REITs in the coastal "shutdown cities" have been slammed as residents flee to lower-cost suburban markets and business-friendly Sunbelt metros.
• While forthcoming vaccines may reverse recent dynamics, rental rates and occupancy levels have plunged in New York, L.A., Chicago, D.C., and San Francisco, and don't yet appear to have bottomed.
• Third-quarter earnings results revealed a striking bifurcation between the coastal and sunbelt-focused REITs. Sunbelt-focused REITs continue to see positive rent and occupancy growth in Q3, which further accelerated into October.
• No "rent strikes." Contrary to dire forecasts, rent collection rates have remained with several percentage-points of pre-pandemic levels throughout the pandemic and have generally improved since the "shutdown months."
• Outside of the troubled urban metros, national apartment markets have been remarkably resilient. Trading near the cheapest multiples of the post-recession period, apartment REIT valuations appear compelling as the U.S. housing industry continues to lead the post-pandemic recovery.

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