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Equity REITs continued their downward trajectory this week, with the FTSE Nareit All Equity REITs down 1.07% from last week, as rising inflation points to another interest rate hike possibility.
The Consumer Price Index rose 0.5% M/M in January, a tick higher than the 0.4% expected and a jump from the 0.1% increase in December.
“There’s nothing in this CPI report to deter the Fed from staying the course of another quarter-point interest rate hike, but there will still be another round of employment and inflation reports prior to the conclusion of the Federal Reserve’s next meeting March 22,” Neal Keane, head of sales trading at international brokerage ADSS, said.
Hotel REITs saw the biggest decline in value W/W, with the index down 4.26%.
Host Hotels & Resorts (HST) was down despite posting a beat in Q4 results, as the company expects macroeconomic headwinds to impact future results. The company expects margins to decline in 2023 on a yearly basis, considering wage inflation, closer to stable staffing levels, higher insurance and utility expenses, lower attrition and cancelation fees, and occupancy below 2019 levels.
Meanwhile, healthcare REITs increased in value from last week, driven by strong results and on investment announcements by capital market companies.
Comparatively, the broader real estate index fell 1.32% and the S&P 500 index was down by 0.28% on a weekly basis.
Mortgage REITs were outliers, with the index rising 0.66% compared to last week.
