REITs Rally As Rates Tumble

2025-03-02 09:00:00 ET

Summary

• US equity markets declined for the fourth week in the past five after a frenetic slate of geopolitical headlines and economic data indicated a sluggish start to 2025 for global growth.
• The Atlanta Fed's updated growth forecast indicated a -1.5% contraction in first-quarter GDP, while PCE data showed the first monthly decline in personal spending in nearly two years.
• Buoyed by the interest rate retreat, real estate equities were also a notable source of strength this week as REIT earnings season wrapped up with a surprisingly solid slate of results.
• While the S&P 500 declined 1.0% on the week, the Equity REIT Index rallied 2.5%, with 14-of-18 property sectors in positive territory. Residential, Industrial, and Office REITs led the rebound.
• Embattled hospital owner Medical Properties Trust surged 20% after results provided some hope for a turnaround. Sun Communities and Global Net Lease rallied over 8% after announcing significant asset sales. Two-thirds of REITs topped earnings estimates - the strongest quarter since the start of the pandemic.

Real Estate Weekly Outlook

US equity markets declined for the fourth week in the past five - while benchmark interest rates tumbled to two-month lows - on a frenetic week of geopolitical headlines and economic data indicating a sluggish start to 2025. The Atlanta Fed's updated GDPNow forecast indicated a -1.5% contraction in first-quarter U.S. economic growth - down sharply from +2.3% in the prior week. While much of this plunge was attributable to a surge in net imports as retailers stockpiled goods ahead of anticipated tariffs, there were some evident "cracks in the consumer" in PCE data, which showed the first decline in personal spending in two years, consistent with recent survey data showing a dip in consumer and business sentiment in January and early February....

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