Upcoming REIT Earnings: What Can Investors Expect?

The weeks when earnings reports are announced can often be quite volatile, as Wall Street tends to react strongly to earnings beats or misses. What could be worse than waking up to find your largest portfolio position down 5% because it missed the consensus estimate on earnings and/or revenue? Conversely, a strong earnings report can boost a stock price higher for several days.

This week marks the beginning of first-quarter earnings for real estate investment trusts (REITs), and there are key stocks that will be tested and perhaps act as a barometer for other peers in their REIT subsector. Take a look at three REITs whose earnings will be reported within the next week and may have a very strong influence on the rest of that subsector.

Prologis Inc. PLD is a stalwart industrial REIT that owns and manages approximately 1.2 billion square feet in 5,500 industrial logistics properties throughout the U.S. and 18 other countries. Founded in 1983, the San Francisco-based company has long been a leader in appreciation among REIT stocks.

Prologis will announce its first-quarter operating results before the opening bell on April 18. The consensus estimate is for Prologis’s funds from operations (FFO), which many REITs use instead of earnings per share, to come in at $1.20 per share. That would be considerably higher than first-quarter 2022 FFO, which came in at $1.09, beating the Street’s view by $0.02. Rexford Industrial Realty REXR is another industrial REIT that will announce its earnings after the closing bell one day later. So, it’s likely that the numbers Prologis puts out will also have a marked effect on the share price of Rexford Industrial as well.

Increasing dividends are often an indicator of positive future earnings because the board of directors and company executives are sending a signal that projected earnings can cover the higher dividend. Was it a harbinger of strong earnings that on Feb. 23, Prologis hiked its quarterly dividend from $0.79 to $0.87 per share?

Recently, analysts have also been quite positive about Prologis. Near the end of March, both Mizuho and Goldman Sachs announced or reinstated Buy ratings on Prologis. The odds of Prologis reporting strong operating results could be on the increase.

SL Green Realty Corp. SLG is an office REIT and the largest landlord of office buildings in New York City. As of Dec. 31, SL Green held interests in 61 office buildings, totaling 33.1 million square feet.

This past quarter has been brutal for office REITs, and SL Green’s total return from New Year’s to the end of March was negative 28.66%. Wall Street is convinced that the office REITs will continue to have trouble holding onto tenants, as businesses downsize to thwart the effects of a possible recession in the second half of 2023 or the first half of 2024. There also continues to be pressure on businesses to allow their employees to work from home.

In March, SL Green received a downgrade from Barclays, from Equal-Weight to Underweight. Shortly thereafter, a Citigroup analyst maintained a Sell position on SL Green, while slashing its price target from $35 to $17. In February, SL Green’s share price was near $43 per share, but by the end of March, it had reached a low of $18.83.

SL Green will declare its first-quarter operating results after the bell on April 19. The consensus estimates call for FFO of $1.45 per share. One year ago, its first-quarter FFO was $1.65 per share, and it beat the estimates by a penny. Wall Street is obviously not expecting much. As a leading office REIT, SL Green’s first-quarter earnings and revenue, but just as importantly, its occupancy rates, could have a huge impact on the rest of the office subsector.

AGNC Investment Corp. AGNC is a Bethesda, Maryland-based mortgage REIT (mREIT) that invests in U.S. government guaranteed pass-through securities and collateralized mortgage obligations. AGNC has been in business for 15 years and has total assets of over $58 billion.

AGNC pays a monthly dividend of $0.12 per share. The present yield is 14.46%, but investors be warned — AGNC has cut its dividend twice within the past five years.

In early March, a J.P. Morgan analyst upgraded AGNC from Neutral to Overweight and announced a price target of $12.50. AGNC’s most recent share price was $9.96, so there could be considerable potential upside, according to this latest upgrade.

AGNC will release its first-quarter operating results on April 24 after the closing bell. The present consensus estimate is $0.61 per share. One year ago, its first-quarter earnings were $0.72 per share, which beat the analysts’ estimates of $0.63. With the expectations lowered for the upcoming earnings release, mREIT investors would love to see AGNC beat the estimates again and perhaps kick start a rally across the entire subsector.

Over the past five years, private market real estate investments have outperformed the publicly traded REIT market by about 50%. Check out Benzinga’s Real Estate Offering Screener to discover the latest passive real estate investments.

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