Real Estate Investment Trusts are not performing well this year due to concerns over the economy and the interest rates. The closely followed iShares global REIT ETF stock (REET), has risen just by 2.4%, while Vanguard Real Estate Index Fund(VNQ), is only up by 3.30%.
Next week, several important REITs are going to be in the spotlight as they release their financial results. The most important ones are Realty Income (O), Simon Property Group(SPG), Starwood Property(STWD).
SPG
Simon Property Group Chart by TradingView
Simon Property Trust has a market capitalization of more than $57 billion, making it one of the largest REITs of the United States. The company is well known for being the largest mall owner in the United States, where they own 93. The company also invests in 14 mills and six lifestyle centres.
Simon Property Group faced challenges in the last decade as the concerns over the future of malls continued. Malls were feared to not be able to survive the rise of e-commerce. As I noted in 2023,malls are thriving, and Simon’s revenues exceed $5 billion annually. Simon’s occupancy rates have been above 95%.
Simon Property Trust’s financial results will be released next week. The company reported a net profit of $731m in the first quarter. Its Funds From Operations increased to $1.33bn.
Analysts estimate that Simon will generate $1.3 billion in revenue, which is a 3.80% rise from 2023. Estimates for the entire year are $5.2 billion. Simon pays out a 5.2% good dividend.
The daily chart shows that SPG’s share price is slowly rising in recent weeks. The price has remained higher than the Exponential Moving Averaging (EMA) of 50 and 100 days. It has also formed a wedge-shaped pattern that indicates a possible retreat following earnings. It could fall to around $145 if this occurs.
O
This week, the stock of Realty Income defied gravity as its price soared to $60 despite Wall Street’s collapse. The rally coincided with my previous forecast where I mentioned that it had formed a pennant pattern.
The stock of Realty Income jumped following the poor US employment numbers, because it implied that Federal Reserve would start cutting interest rates in September.
The company is expected to publish their results on 5 August. Analysts predict that the company’s revenue in the second quarter will be $1.21 billion. This is flat with the first and above the $995 millions it earned in Q2’23. The company’s revenue will increase because it acquired Spirit Realty during that time.
The stock of Realty Income has now moved above the top side bullish pennant. The stock has now moved past the $57.85 key resistance level, which was its high point from January 2024. The stock also formed a cross-golden pattern when the Exponential Moving Avg. 50 and 200 days crossed.
The stock may continue to rise as long as the buyers aim for the $60.25 key level, which is its peak in July 2023.
STWD
Starwood Property Trust Chart by TradingView
In May, I discussed Starwood Property Trust and predicted that its stock would reach $25. On another note I expressed concern about Starwood Real Estate Income Trust’s (SREIT) suspension of withdrawals.
Starwood Property Trust has underperformed the market this year by falling 8%.
STWD reported a total revenue of $523 millions in the first quarter, with over $430 Million coming from its commercial and residential loan segment. The company’s net profit was $159 millions.
Analysts anticipate that this quarter’s earnings will show a revenue decline to $505 million, down from $523 million in Q1 and $515 millions from 2023.
Investors love STWD because it pays out a strong dividend. Its yield is almost 10% higher than the average in its industry.
On the daily chart we can see that Starwood Property Trust’s stock rose from $19.50 to $20.62 during July. It has since fallen to $19.50. The stock price has been slightly higher than the moving averages of 50 and 200 days.
STWD has no defined chart pattern. The outlook for STWD is therefore neutral. Support and resistance levels to be watched are $18.50 & $20.60. Analysts’ average estimates are slightly higher than the current price of $19.50, at $21.93. JPMorgan Raymond James and BTIG are among the notable analysts who have expressed a bullish view on this stock.
This post REIT stock analysis: Realty Income, Simon Property, Starwood is subject to change as new information becomes available.
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