BBRE ETF

U.S. stock markets bounced back after experiencing their worst week since November, while interest rates reached new seven-month highs as investors analyzed data showing strong retail and travel demand. The S&P 500 rose by 0.7%, increasing its year-to-date gains to over 26%, while the Nasdaq 100's gains for 2024 reached 28%. However, real estate stocks continued to struggle, showing only 4% gains for the second consecutive year after significant declines last week due to the Fed's more aggressive stance.

The REIT sector recovered from a difficult October, showing a solid average total return of +3.19% in November. Small cap REITs led the way with a +4.19% gain, followed by mid cap at +3.70% and large cap at +3.39%, while micro cap REITs saw a slight loss of -0.81%. Overall, 74.19% of REIT securities experienced a positive total return during November.

Trump's win in the election is not good for many Real Estate Investment Trusts (REITs). People believe his policies could lead to more inflation. This means that interest rates might stay elevated for an extended period.

In the third quarter, US equity real estate investment trusts (REITs) raised a record amount of money through at-the-market offering programs. They collected a total of $7.21 billion during this period. Among the different property sectors, healthcare REITs attracted the most funds, raising $2.65 billion through their ATM programs.

This week, U.S. stock markets rose as interest rates fell to their lowest point of the year after Fed Chair Powell announced that it was time to lower rates. This shift in policy, which focuses on "cooling labor markets," was backed by new data showing that job growth has been weaker than previously thought. The S&P 500 increased by 1.4%, getting close to its all-time high, while the Small-Cap 600 and Mid-Cap 400 both saw nearly 3% gains.

We are currently halfway through an important earnings season for real estate, with 75 out of about 150 equity REITs and 19 out of 38 mortgage REITs having shared their results. Despite a generally disappointing earnings season in the wider market, the results from REITs have been significantly better than expected, boosting optimism about interest rates. Among the 65 equity REITs that have given full-year guidance for Funds from Operations (FFO), 44 (68%) have increased their forecasts, while only 6 (8%) have decreased theirs.

The REIT sector continued to recover in June with a +1.12% average total return, but closed out the first half of the year in the red (-3.86%). Micro cap REITs (-3.79%) averaged a negative total return in June, but small caps (+1.01%), mid-caps (+2.29%) and large caps (+2.88%) finished in the black. 65.58% of REIT securities had a positive total return in June.

Rate cuts have finally arrived, but why hasn't it benefitted REITs? What's needed to lift the REITs market. Why REITs are still struggling.

After a rough start to the year, REITs partially bounced back in May with a +2.51% average total return. Small-cap REITs (-0.48%) averaged a negative return in May, but micro caps (+5.09%), large caps (+4.28%) and mid caps (+3.35%) were solidly in the black. 74.03% of REIT securities had a positive total return in May.