Be on the lookout!

This week will be a big one. Well, kinda. The U.S. women's soccer just barely lost the World Cup championship, I get a free sandwich for lunch tomorrow, and baseball is back from the all-star break. Hopefully the Phillies will keep up with their winning ways, but good luck to whatever insignificant team you happen to root for.  Also happening this week, in the commercial real estate world, apartment REITs will be divulging their midyear results, but analysts are wary of the factors that could possibly affect their performance.

According to MultifamilyExecutive.com, in regards to apartment REITs, “analysts again expect fundamentals to be good. But the dour economic news of the last couple of weeks has some wondering if the sluggish economy may put a ceiling on the robust apartment recovery.” Supposedly, there are three things that analysts are looking at for these second quarter reports.

The first is that “guidance will go up.” “Haendel St. Juste, an analyst at Keefe, Bruyette & Woods (KBW), based in New York, expects more REITs to increase guidance. “You expect more than half of them to raise operating and earning guidance,” he says.”

“Specifically, St. Juste expects Palo Alto, Calif.-based Essex Property Trust (ESS); Houston-based Camden Property Trust (CPT); Cleveland-based Associated Estates Realty (AEC); San Francisco-based BRE Properties (BRE); Birmingham, Ala.-based Colonial Property Trust (CLP); Chicago-based Equity Residential (EQR); and Atlanta-based Post Properties (PPS) to raise their guidance levels for the year.”

Next, analysts are extremely wary of the current economic situation. “Analysts expect REITs to continue their strong growth in the second quarter. “Rent growth continues despite economic uncertainty,” St. Juste says.” However, we will most likely need to see strong economic growth to really feel comfortable about the current REIT growth.

The final factor that analysts are looking at is companies adding mass. REIT buying is continuing, which has an affect on the apartment REIT results. Shedding assets has been a trend in the last quarter, but the cycle could turn around.

I'm sure that anyone interested in apartment REITs and commercial real estate will be very excited, or anxious, to hear what these REITs have to report. Hopefully the results will continue to be strong and become a beacon of hope for the rest of the economy.

But who knows?

What do you think about the upcoming apartment REIT reports?

Source article by Les Shaver at MultifamilyExecutive.com

#CRE #economy #finance