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ONE BIG THING

September Slam: Market Gets Creamed Post Labor Day, But Which REITs Gained?

What: The first trading day after Labor Day was dismal for stocks. The Dow dropped 626 points or 1.51%, the S&P was off 119.47 or 2.12% and the Nasdaq lost 577.33 points or 3.26%. Market stalwart, NVIDIA Corp (Nasdaq: NVDA) fell almost 10%.

Who: Over 70% of all REITs sold off, with many losing 3% or more on the day. Nevertheless, a few REITs stood out for making gains, showing top-tier relative strength against their peers. These included:

Medalist Diversified REIT Inc (Nasdaq: MDRR) Up 3.20%, American Tower Corp (NYSE: AMT) Up 2.82%, SBA Communications Corp (Nasdaq: SBAC) Up 1.83% and Franklin BSP Realty Trust Inc (NYSE: FBRT) Up 1.75%. Even Medical Properties Trust Inc (NYSE: MPW), which took a beating in August, finished 1.33% higher.

However, REITs made gains over the next few days and by Thursday afternoon about 50% were higher for the week.

Why: Two separate manufacturing production readings came in weaker than expected. S&P Global’s reading declined from July to August and the Institute for Supply Management’s reading was below the economists’ expectations.

Medalist Diversified REIT moved up on news that its CEO has been snapping up shares for his portfolio. Medalist shares have rallied since mid-August. Steve Vondran, the CEO of American Tower is scheduled to speak at three upcoming conferences within the next week and investors were anticipating what he might have to say. SBAC’s President and CEO, Brendan Cavanagh, will also speak at a few upcoming conferences.

When manufacturing production readings are weaker than expected, the markets hear “possible recession” and it becomes “Katy, bar the door.” Markets sold off from the opening bell and continued selling up until the very last moments of the day.

Takeaway: September can be a tough month for stocks and investors all wanted to slam through the exits before we get any deeper into the month. However, keep in mind, there is always money to be made somewhere in the markets and REITs, with their dividends and low beta, are as good a place to be as any.

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REIT Roundup

Gladstone Commercial Corporation (Nasdaq: GOOD) September 3, announced it acquired a 50,102 square foot Class A industrial manufacturing, distribution and service facility in Midland, TX. The facility was acquired in a long-term sale-leaseback transaction with a 15-year absolute triple net lease. No acquisition price was given.

Uniti Group Inc (Nasdaq: UNIT) September 3, announced a new 20-year contract with a hyperscale customer in Alabama. Uniti will construct a new 200+ mile long-haul route as part of the transaction and a multi-duct fiber system between Montgomery and Mobile, AL.

CareTrust REIT Inc (NYSE CTRE) August 29, announced the acquisition of two skilled nursing facilities (SNF) for $62.10 million. One on the West Coast was acquired on August 29 and the other in the mid-Atlantic closed on August 7.

Generation Income Properties Inc (Nasdaq: GIPR) August 29, announced the acquisition of a 30,465 square-foot retail building in Ames, Iowa for $5.5 million. The existing lease still has six years remaining.

Kimco Realty Corp (NYSE: KIM) September 4, announced it amended and upsized its unsecured term loan from $500 million to $550 million. The loan has an incremental term rate up to 4.3175%.

Global Net Lease Inc (NYSE: GNL) September 4, announced it sold the plant shopping Center in San Jose, CA for $95 Million and the Foster Wheeler Office Property in Shinfield Park, Reading, U.K. for over $27 Million.

Easterly Government Properties Inc (NYSE: DEA) September 5, announced it acquired a 99,246 square foot facility in Beavercreek, OH, that’s 100% leased to Northrop Grumman Corp (NYSE: NOC).

Cousins Properties Inc (NYSE: CUZ) September 5, announced it has signed a 320,000 square foot lease for all of its Domain 12 property in Austin, TX, and will extend the lease previously with Meta Platforms from 2031 to 2040. The lease assumption will begin on January 1, 2026.

Upgrades

Eastgroup Properties Inc (NYSE: EGP) September 5, Mizuho analyst Vikram Malhotra upgraded Eastgroup Properties from Neutral to Outperform and raised the price target from $175 to $200.

KKR Real Estate Finance Trust Inc (NYSE: KREF) September 5, Keefe, Bruyette & Woods analyst Jade Rahmani upgraded Eastgroup Properties from Market Perform to Outperform and raised the price target from $11.50 to $13.

Starwood Property Trust Inc (NYSE: STWD) September 5, Keefe, Bruyette & Woods analyst Jade Rahmani upgraded Eastgroup Properties from Market Perform to Outperform and raised the price target from $20.50 to $22.50.

Downgrades

Simon Property Group Inc (NYSE: SPG) September 3, Piper Sandler analyst Alexander Goldfarb downgraded Simon Property Group from Overweight to Neutral and lowered the price target from $190 to $175.

Terreno Realty Corp (NYSE: TRNO) September 5, Mizuho analyst Vikram Malhotra downgraded Terreno Realty from Neutral to Underperform and maintained the price target at $62.

Insider Transactions

Medalist Diversified REIT Inc (Nasdaq: MDRR) August 30, CEO/President/Chairman Frank Kavanaugh purchased 5,569 shares of Medalist Diversified common stock at an average price of $12.31. Mr. Kavanaugh also purchased 6,800 shares on August 15 at $12.08. The total purchase amounted to $150,698.

Extra Space Storage Inc (NYSE: EXR) August 29, William Springer, Executive VP of Extra Space Storage sold 2,000 shares of Extra Space Storage for a total of $350,660.

Winners & Losers

📈 Biggest Winners This Week: Healthcare and Data REITs

• Uniti Group Inc (Nasdaq: UNIT) Up 19.27%

• Medical Properties Trust Inc (NYSE: MPW) Up 11.06%

• American Healthcare REIT Inc (NYSE: AHR) Up 7.27%

• Sila Realty Trust Inc (NYSE: SILA) Up 6.89%

• American Tower Corp (NYSE: AMT) Up 4.39%

• SBA Communications Corp (Nasdaq: SBAC) Up 3.69%

📉 Biggest Losers This Week: Mortgage and Hotel REITs

• Community Healthcare Trust Inc (NYSE: CHCT) Down 9.08%

• Host Hotels & Resorts Inc (Nasdaq: HST) Down 5.50%

• Park Hotels & Resorts Inc (NYSE: PK) Down 5.17%

• Arbor Realty Trust Inc (NYSE: ABR) Down 4.82%

• Sunstone Hotel Investors Inc (NYSE: SHO) Down 4.74%

• Claros Mortgage Trust Inc (NYSE: CMTG) Down 4.21%

ONE FOR THE ROAD

“Boommates”: Inflation Sparks A New R.E. Trend

What: A new real estate trend called “Boommates” has taken hold, in which older Americans fight the ravages of inflation by taking in peer-group roommates. The term comes from combining the terms “roommates” and “Boomers,” as in the Baby Boomer generation.

Who: Harvard University’s Joint Center for Housing Studies says that nearly one million people age 65 and over are now living with unrelated roommates. Large real estate-oriented websites like spareroom.com that find rooms and roommates for people are noticing a significant rise in older users.

Why: The two youngest generations aren’t the only ones to feel the pinch of sharply increasing rents, food and gasoline within the past three years. As bad as it has been for Gen Z and Millennials, older Americans living on fixed incomes are finding it more difficult than ever to stay ahead of rising costs. Senior homeowners are finding they can generate additional income by renting out a spare room that’s no longer needed with children long gone from the home.

Seniors may prefer to rent to other Seniors, as they’re more likely to feel secure and have more in common with people their age. Widows and widowers may often feel lonely, so taking in a roommate is not just a financial decision but can also fulfill a social need.

The same holds for those Seniors seeking a room to rent. Most are single, without a lot of money, and struggling to pay rent which is 30% higher than the pre-pandemic era. The Senior nonprofit organization, Front Porch notes that the average annual income of the room provider is just over $46,000, while the average yearly income of the housing seeker is approximately $40,000.

Takeaway: The Boommates trend is increasing and seems to be here to stay. Many older Americans did not prepare adequately for retirement and are finding they cannot make it on Social Security and an IRA alone. While they choose to remain in their homes, rising taxes, insurance and maintenance make doing so more difficult. However, one thing about Americans- when the going gets tough, the creative solution juices start flowing. And so, Boomers have now carved out a new trend in the real estate world.