XLRE - REITs increase on solid results even though major indices decline
2023-08-12 12:00:00 ET
REITs increased this week given the solid quarterly results, even though major indices declined on the back of higher inflation and jobless claims data.
The Consumer Price Index rose 0.2% in July, with inflation from shelter accounting for over 90% of the inflation. The Producer Price Index increased slightly more than expected in July.
Initial jobless claims for the week ended Aug. 5 rose by 21K to 248K vs. 230K expected and 227K prior.
S&P 500 declined by 0.31% on a weekly basis, but FTSE Nareit All Equity REITs gained by 0.45%.
The gain could be attributed to a solid quarterly earnings season, with 52% of the 86 equity REITs that provide full-year FFO guidance raising their outlook. This was partly offset by a decline in revenues .
The broader real estate index increased by 0.86%.
On the flip side, FTSE Nareit Mortgage REITs fell by 1.41% as mortgage rates rose for the third consecutive week.
Higher interest rates have made it tough for borrowers to refinance and many properties are suffering higher vacancy rates. Mortgage REITs are pulling back from new lending, a recent report by The Wall Street Journal showed .
For the week ended Aug. 11, Self Storage REITs were the biggest winners, having gained 3.94% from last week.
Data centers and Infrastructure subsectors followed.
Health Care was a laggard, having lost 1.88% of value.
Here is a look at the subsector performance:
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REITs increase on solid results, even though major indices decline