OPI - REITs finish week in red as earnings season ends broader markets also hit

2023-05-13 12:00:00 ET

REITs finished the week in red as the strong quarterly earnings season marked its end, and inflation fears and renewed regional banking concerns hit broader markets.

The FTSE Nareit All Equity REITs index finished the week 1.18% lower, compared to S&P 500 which was down by 0.29% from last week and Real Estate Select Sector SPDR ETF which fell by 0.93% on a weekly basis.

The economic data showed a rise in a gauge of inflation expectations and renewed fears about the stability of regional banks.

REITs delivered strong first-quarter results, leading to improved returns during the earnings season as compared to the sector's 2022 performance, according to a recent report by Seeking Alpha contributor Hoya Capital.

The positive catalyst, however, will no longer exist.

Notably, losers of the REITs earnings season include the Office subsector, also a major laggard of the week. The Office subsector lost 5.08% of its value from last week.

Timber, infrastructure and data centers were among the outliers, having ended the week in green.

However, the difference in terms of percentage were insignificant.

Falling interest rates can bolster REIT returns but the broader economic environment is much more important, SA columnist Andrew Nelson said .

Investors should not expect the end of Federal Reserve rate hikes to boost REITs, Nelson said.

Here is a look at the subsector performance this week:

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