REITs Slide To Even Lower New Lows: These 4 Get There
Real estate investment trusts have been among the worst 12-month performers as the Fed took interest rates higher and as the banking industry adjusted to difficulties. The lack of new interest in REITs —and the selling — appears to stem from concerns about the reduced value of underlying properties and the increased expense of funding projects.
Other factors add up as well: as remote work becomes more of a standard business practice, the less office space is needed, putting pressure on demand.
Companies that borrowed money a year ago and now wish to do so again are finding how much more expensive it is with rates so much higher. Some REITs are managing to remain above their lows from late last year but these 4 just keep heading lower, dragging down the benchmarks for the sector.
REITs Hitting New Lows.
Granite Point Mortgage Trust (NYSE: GPMT) is a mortgage REIT, making it a rate-sensitive security subject to the direction of U. S. Treasury yields. The commercial real estate company, based in New York, New York, trades at just 23% of its book value. Funds from operations over the most recently reported 12-months are -184% and for the past 5 years, -23%. Granite Point pays an 18.52% dividend, so high that it may be unsustainable in the current economic environment.
Here’s the weekly price chart:
The REIT is trading well below both the 200-week moving average (the red line) and the 50-week moving average (the blue line).
Industrial Logistics Properties Trust (NASDAQ NDAQ : ILPT), headquartered in Newton, Massachusetts, owns and leases industrial and office spaces around the country. The past 5-year funds from operations comes in at -37% and for the past 12 months at -289%. Shares are available for purchase at a 73% discount from book. Industrial Logistics pays a dividend of 2.00%.
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The weekly chart looks like this:
From $27 in October, 2021 to the current price of just $2.00 — this is an extraordinary example of selling in the REIT sector.
NexPoint Real Estate Finance (NYSE: NREF) is a commercial real estate operation based in Dallas, Texas. The company trades at 51% of its book value with a price to free cash flow of 6.43. The most recently reported 12-months funds from operations shows a -90% growth rate and, for the past 5 years, it’s +26%. The REIT is paying its investors a 15.04% dividend.
The weekly price chart is here:
It’s dropped to below the previous support level seen in September/October, 2022 and trades significantly below its 50-week moving average.
Piedmont Office Realty Trust (NYSE: PDM) owns, develops and manages office properties, located mostly in so-called “Sunbelt” cities. With corporate offices in Atlanta, Georgia, the company’s funds from operations over the last year declined by 102%. The past 5 years growth rate is 5.30%. Piedmont offers a dividend of 13.06%.
From $18 at the beginning of 2022 to the current price of $6.43 — this is another example of the seriousness of shareholders unloading.
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