REITs continued to bleed in the first week of the fourth quarter, with the FTSE Nareit All Equity REITs index down 4.27% and the Real Estate Select Sector SPDR ETF falling 4.11%, despite the broader S&P 500 index managed a bounce back with 1.51% gain in the week. 8 out of 11 sub sectors finished in red.
Here is a look at the performance of the sub-sectors:
The major outlier was Hotel REITs which finished 2.6% higher followed by timber which gained 1.02% during the week. The top laggard was Infrastructure REIT which fell 8.7%.
Hotel REIT was the top-performing sector this week. Several years of pent-up leisure demand from COVID delays helped to offset a slow business travel recovery, according to Seeking Alpha Author Hoya Capital.
Solid operating performance and improved balance sheet health have fueled the long-awaited return of dividend distributions. Ten of 16 hotel REITs have either reinstated or raised their dividends this year, the author said.
On the other hand, infrastructure, healthcare and residential REIT sub-sectors declined the most in value on a weekly basis.
Among healthcare, Global Medical REIT (GMRE) especially fell significantly after BMO Capital Markets Analyst Juan Sanabria downgraded it to Market Perform from Outperform on its elevated leverage and floating rate debt exposure and the challenging cost of capital environments.
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