UNIT - REITs Are Suddenly Cheap

• Nearly 200 REITs have reported earnings results over the past three weeks, providing critical information on the state of the real estate industry amid the extreme volatility in early 2022.
• Results were generally better-than-expected with roughly 85% of equity REITs beating consensus FFO estimates while nearly 70% of the REITs that provide forward guidance raised their full-year outlook.
• Despite the strong slate of earnings reports across most property sectors, however, performance trends continue to be dominated by macroeconomic factors and the broader sell-off across essentially all asset classes.
• Consistent with a theme of recent quarters, reports from residential and shopping center REITs were most impressive, followed closely behind by industrial and storage REITs. Mortgage REITs have also been a bright spot amid the carnage over the past several weeks.
• The steep sell-off combined with upward earnings revisions and dividend hikes has pulled valuations to the "cheapest" level since 2020 and swelled the average dividend yield to the highest since 2018.

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