Weakness continues in the real estate investment trust (REIT) sector as investors dump shares.
The continued selling this week was enough to take all three of these REITs to 52-week lows. This is not a bullish sign for the group given that the trend is irreversibly turning down this year.
Investors might be thinking that these REITs will at least go into “relief rally” mode, having come off their highs of a few weeks ago. But no. They may also conclude that the 30-year mortgage rate coming down from its high of a few weeks ago would encourage buying in this particularly interest rate sensitive area. not again.
is here Point-and-figure chart of the CBOE 10-year US Treasury yield:
Let’s see how the yield is coming down.
is here Point-and-figure chart for 30-year fixed-yield mortgage average In America:
The yield on it, widely among mortgage analysts, hit 7 and is now lower.
Under these circumstances, the following REITs could start to perform more favorably.
is here Broadmark Realty Capital Inc. Daily price chart for. BRMK,
This is a new 52-week low, and the REIT continues to trade well below the 50-day EMA and the declining 200-day EMA. Broadmark is trading at half its book value with a price-earnings ratio of 9.8. The company is paying a dividend of 19.31%, which may be difficult to sustain in the current economic conditions.
like this Looks at the daily price chart for Douglas Emmett Inc. gave
The REIT fell to a 52-week low at the open and rallied back but not enough to close with the day’s gains. Douglas Emmett is in office building sector and is now trading at 1.11 times book with price-earnings ratio of 31. The company pays a dividend of 6.89%.
is here Granite Point Mortgage Trust Inc. Daily price chart for. GPMT,
It went down at the open, set a new 52-week low and then traded higher and has not recovered it to the November 16 low. The REIT is having trouble rising above the 50-day moving average and staying there. The 200 day moving average is continuing to move down.
Granite Point is a mortgage real estate investment trust that is now trading at 0.30 book and pays a 17.67% dividend, another high paying REIT unlikely to remain at that level.
Other REITs have responded somewhat better to the recent modest correction in interest rates, but all three and a few others are in decline.
REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it’s too late. Benzinga’s in-house real estate research team is hard at work identifying the biggest opportunities in today’s market, which you can access for free by signing up. Benzinga’s Weekly REIT Report.
Not investment advice. For educational purposes only.
Chart courtesy of Stockcharts