REITs Fall on Economic Data
Real Estate Investment Trust Stocks Decline As Housing, Economic Data Spark Recession Concerns
Real estate investment trusts gave back some of their previous day’s gains on Tuesday, weighed down by negative housing data and a disappointing consumer confidence report.
Shares of Boston Properties Inc. dropped $2.67, or 2.5 percent, to $103.27 in afternoon trading, while fellow office REIT SL Green Realty Corp. lost $2.14, or 2 percent, to $109.96.
Industrial REIT ProLogis declined $1.79, or 2.7 percent, to $64.83, and shares of competitor AMB Property Corp. fell $1.12, or 1.9 percent, to $58.28. Kimco Realty Corp, a retail company, decreased $1.52, or 3.3 percent, to $44.93. Apartment Investment & Management Co. shed 88 cents, or 2 percent, to $44.96.
“The sector was up substantially yesterday but with this morning’s data, more consideration is being given to the potential of an economic recession or a more drawn-out period of slower growth,” said BMO Capital Markets analyst Rich Anderson in a phone interview with The Associated Press.
The sector clocked in a 1.43 percent gain on Monday, according to the National Association of Real Estate Investment Trusts, while the Dow Jones industrials gave up 0.44 percent and the Standard & Poor’s 500 index fell 0.53 percent.
On Tuesday, the New York-based Conference Board said its index measuring consumer sentiment dropped to its lowest level in nearly two years. That coincided with a National Association of Realtors’ report that showed sales of existing homes falling for a sixth straight month in August.
Homebuilder Lennar Corp.’s record third-quarter loss also added to the bad news as well as S&P/Case-Shiller’s index showing U.S. home prices posting the steepest drop in 16 years.
However, Anderson believes the worst may be over for the sector, which has plunged 6.09 percent year-to-date, according to NAREIT.
“One day does not make a story. REITs have been stabilizing in the past few weeks in line with the broader market,” he said. “Generally speaking REITs have hit a floor from a valuation standpoint. We’re not expecting much in the near term, but the fundamentals are still fine across all real estate sectors.”