5 REITs Dropping To New Lows On Higher Rates Concerns

The problem with REITs is that interest rates seem to be on the rise despite earlier expectations that they would be headed down again probably by early to mid-2024.

The recent action in 10-year Treasury yields — back up to 4.4% — and in the 30-fixed mortgage rate — a 20+ year high of 7.09% — is an unhappy look for interest-rate sensitive sectors such as real estate investment trusts.

Many of them dropped to new 52-week lows last week and these 5 caught my attention:

Crown Castle International is one of the really big REITs with a market capitalization of $43.28 billion. Average daily volume on the New York Stock Exchange comes to 3.09 million shares. The price-earnings ratio is 25.50 and the company is paying a dividend of 6.25%.

The daily price chart (below) shows the damage so far this year: from a February peak of $150 to the current price — and new low — of $100. Note that it trades steadily below both its 50-day moving average (the blue line) and its 200-day moving average (the red line).

Hannan Armstrong Sustainable Infrastructure Capital Trust trades with the rather steep price-earnings ratio of 38 — that’s above the Shiller p/e for the Standard and Poor’s 500 which now sits at 31. Market capitalization is $2.16 billion. This REIT pays a 7.51% dividend.

The daily price chart shows a move from a February high of just above $38 to this week’s low of $20 before a short bounce back. Hannon Armstrong trades below its 50-day and its 200-day moving average. The relative strength index (RSI, below the price chart) suggests that a positive divergence from March to the prsent.

Medical Properties Trust saw the most single-day volume of the year on Friday and most of it consisted of sell orders. The REIT trades at half its book value with a p/e of 59. The dividend of 16.74% is likely unsustainable under the current conditions. Market capitalization is $4.49 billion.

After a decent rally from the late March lows to the late July high, it’s been a relentless “get me out” type of situation during August. Medical Properties Trust trades well below both the 50-day moving average and the 200-day moving average, not a bullish pattern.

W. P. Carey & Company has a market capitalization of $13.76 billion and average daily volume of 1.07 million shares. The price-earnings ratio is 17.09. The company pays a 6.69% dividend. Earnings have been decent: up 33.50% this year and up 3.70% over the past 5 years.

The peak price of $83 in late January has given way to the August price of $63.93, a typical type of downtrend for most in the sector. It’s a bearish picture that the stock is unable to make above the 2 significant moving averages.

Xenia Hotels and Resorts is smaller than the above REITs with a market capitalization of $1.20 billion. It trades with a price-earnings ratio of 23.77 and at just 89% of book value. Average daily volume is relatively light for an NYSE stock at 807,000 shares. The dividend is 3.54%.

You can see the downtrend now in place on the daily chart below. It’s been unable all this year to gain enough strength to make above the 200-day moving average. Right now, it’s back to well below the 50-day moving average.

Should interest rates and mortgage rates have peaked, everything could change — but for now, this sector trends downward.