Where’s The REIT Selloff?


sampleLast Wednesday, Janet Yellen announced the so much anticipated interest rate hike. Result: REIT stocks increased 1.1% over the past week. I wonder where the critics who anticipated a selloff are. I know a quarter-percent increase is not much, but Yellen is planning to gradually raise interest rates to 3 or 4% over the next three years. As long as it is slow, apparently, it will turn out okay.

In fact, most REIT stocks increased, as did most sectors. Manufactured homes, which had been quiet for a long time, soared by 5%. UMH Properties, the smallest manufactured home REIT, rose 10%. Timber stocks, on the other hand, ran out of gas, following the Weyerhaeuser-Plum Creek merger and fell 3%; month-to-date timber decreased 9%.

Neither Strategic Hotels & Resorts nor Chambers Street Properties has been traded anymore. Strategic Hotels was sold to Blackstone. Chambers merged with Gramercy Property Trust, and Chambers, the surviving company, was renamed Gramercy. Chambers shareholders enjoyed a 12% bump following the two-step change.

Last week, CorEnergy Infrastructure slid 16%. It dropped 45% this month and 57% this year, making it the REIT stock with the worst returns. Its dividend yield passed the 20% mark and is now at 22%, while its price-to-AFFO is 4×.

We have found no specific reason for CorEnergy’s huge drop. After the company performed a reverse stock split early in December, the shares began sliding significantly. During the same period, Yellen implied the Fed would raise interest rates. If any REIT casualty is due to the Fed decision, maybe CorEnergy is it.

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Companies: UMH Properties, Inc (NYSE:UMH), Weyerhaeuser Co. (NYSE:WY), Plum Creek Timber Company, Inc. (NYSE:PCL), Gramercy Property Trust, Inc. (GPT), CorEnergy Infrastructure Trust (NYSE:CORR).

Disclaimer: This is not a recommendation to buy or sell stocks. The highest-yield stocks are not necessarily the best portfolio investment choice. The purpose of this report — which is essentially a snapshot of information available on December 18, 2015 — is to reduce your stock analysis by enabling you to compare stock and sector performance. Please do your own due diligence before making any investment decision.

As of November 30, 2015, the equity REITs are constituent companies of the FTSE NAREIT All REITs Index. Companies whose equity market capitalization is lower than $100 million have been disregarded.

This report is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.

Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.

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