Funtap
Equity REITs saw its average Q1 2024 earnings hold steady on a sequential as well as yearly basis, Nareit’s latest quarterly T-Tracker report showed.
The sector reported an average Q1 FFO per share of $0.74, flat from a year ago and last quarter, the report said.
Aggregate funds from operations across the industry came in at $18.84B, roughly unchanged from $18.76B in Q4 2023 and $18.65B in the year-ago quarter.
Retail continued to post the maximum FFO among subsectors, logging an aggregate FFO of $3.97B in Q1. Residential followed, with FFO of $2.69B.
Telecommunications was the next on the list, posting an aggregate FFO of $2.44B for the quarter.
Guidance
Of the 99 REITs that provide guidance, 48% maintained their 2024 FFO outlook. A total of 41% raised the guidance, while 11% lowered it, Seeking Alpha author Hoya Capital said in a recent report.
Apartments were the notable winners of the Q1 earnings season among subsectors, with five of the 11 residential REITs that provide guidance raising their full-year outlook. Essex Property Trust (ESS) delivered the most significant upward revision, the author said in a separate report.
Industrial REITs saw the most downward revisions to their 2024 outlook. Prologis (PLD), the worst-performing large-cap REIT for the earnings season, trimmed its guidance on the back of softer demand and a particular weakness in its Southern California portfolio.
Performance
FTSE NAREIT Mortgage REITs index lost 3.94% in Q1 to close at 2.68 on March 28. The index has declined 7.58% year-to-date, while the broader Real Estate Select Sector SPDR Fund ETF (NYSEARCA:XLRE) has dipped 6.76%.
Seeking Alpha’s Quant Rating system ranks industrial REITs NewLake Capital Partners (OTCQX:NLCP) and Innovative Industrial Properties (IIPR) and diversified REIT CTO Realty Growth (CTO) as the top picks. NLCP and IIPR are graded A+ and A, respectively, for profitability, while CTO is graded as C-.
