Happy Friday! The Presidents Day holiday-shortened week began with a rough start on Tuesday and Wednesday was much of the same. Markets were nervously awaiting Nividia Corp’s (Nasdaq: NVDA) fourth-quarter earnings, along with the minutes of the previous Fed meeting.

The FED minutes held no surprises- Governors were worried about cutting rates too soon and unsure of how long rates would need to remain where they are.

But on Thursday, Nividia’s earnings were released, they again were terrific, and Nirvana was back in the markets again. The major indices flew up and that brought REITs along for the ride.

Plus, from today’s sponsor: is fractional real estate investing the future of Gen Z portfolios?

PRESENTED BY GROUNDFLOOR

Is Fractional Real Estate Investing The Future Of Gen Z Portfolios?

At 20% of the U.S. population, Generation Z is beginning to reshape the world of finance, shifting away from traditional investments and toward alternatives like real estate, artwork and cryptocurrencies. 

This shift is primarily driven by their financial realities: living paycheck-to-paycheck and seeking financial independence rather than more traditional markers of wealth. 

Groundfloor is tapping into this trend by offering fractional real estate investments, aligning with Gen Z's preference for accessible, technology-driven options.

For more insights into Groundfloor’s role in advancing alternative investments, visit their website.

Plus, Benzinga readers earn a free $50 credit.

REIT ROUNDUP:

Armada Hoffler Properties Inc (NYSE: AHH) February 15, announced that Shawn Tibbetts, presently the COO of Armada Hoffler, has been named President..

National Storage Affiliates Trust (NYSE: NSA) February 15, announced that Lisa R. Cohn, the President and General Counsel of Apartment Income REIT Corp (NYSE: AIRC) has been appointed to the National Storage Board of Directors.

LXP Industrial Trust (NYSE: LXP) February 16, announced it has filed a Mixed Shelf Offering, but the size was not disclosed.

U-Haul Holding Co (NYSE: UHAL) February 16, announced it is building an 80,000 square foot, 3-story building with 900 self-storage rooms in Rapid City, South Dakota.

Whitestone REIT (NYSE: WSR) February 21, announced it has acquired the Garden Oaks Shopping Center, a grocery-anchored Houston Shopping Center that contains 107,000 leasable square feet of space.

Xenia Hotels & Resorts Inc (NYSE: XHR) February 21, announced its 2024 Annual Meeting of Stockholders will be held in Orlando, FL on May 14, 2024. March 21 is the record date for determining stockholders who may vote at the meeting.

Healthpeak Properties Inc (NYSE: PEAK) February 21, announced its merger with Physicians Realty Trust (NYSE: DOC) has been approved by its shareholders

DIVIDEND NEWS

Armada Hoffler Properties Inc: February 20, announced a 5.1% increase in its quarterly cash dividend from $0.195 to $0.205 per share. The dividend, which now yields 7.19%, will be paid April 4 to shareholders of record on March 27. The ex-dividend date is March 26.

Centerspace (NYSE: CSR) February 20, raised its quarterly dividend from $0.73 to $0.75 per share.

Sun Communities Inc (NYSE: SUI) February 20, raised its annual dividend from $3.72 to $3.76 per share. The increase will begin with Q1 2024, but the board will determine the amount for each subsequent quarter.

American Homes 4 Rent Class A (NYSE: AMH) February 21, raised its quarterly dividend 18% from $0.22 to $0.26 per share, payable March 28 to shareholders of record on March 15.

Notable Earnings:

The following table shows several REITs that reported 4th quarter earnings this week, vs estimates and the year ago quarter:

WINNERS & LOSERS

📈 Biggest Winners This Week:  Specialty and some Mortgage REITs were hot

• TPG RE Finance Trust Inc (NYSE: TRTX) Up 20.53%

• Outfront Media Inc (NYSE: OUT) Up 14.05%

• Uniti Group Inc (Nasdaq: UNIT) Up 11.37%

• National Health Investors Inc (NYSE: NHI) Up 7.02%

• Park Hotels & Resorts Inc (NYSE: PK) Up 6.64%

• Iron Mountain Inc (NYSE: IRM) Up 5.94%

Biggest Losers This Week: Office REITs had no rally.

• Bridge Investment Group Holdings Inc (NYSE: BRDG) Down 16.52%

• Office Properties Income Trust (Nasdaq: OPI) Down 14.59%

• Arbor Realty Trust Inc (NYSE: ABR) Down 8.51%

• NexPoint Residential Trust Inc (NYSE: NXRT) Down 8.40%

• Hudson Pacific Properties Inc (NYSE: HPP) Down 8.14%

• Industrial Logistics Property Trust (Nasdaq: ILPT) Down 7.62%

• CIO Office REIT Inc (NYSE: CIO) Down 6.95%

• Piedmont Office Realty Trust (NYSE: PDM) Down 6.06%

Prices as of 2/22 12:00 Noon

UPGRADES/DOWNGRADES:

Digital Realty Trust Inc (NYSE: DLR) February 16, Scotiabank analyst Maher Yaghi downgraded Digital Realty Trust from Sector Outperform to Sector Perform.

Hudson Pacific Properties Inc (NYSE: HPP) February 20, Wedbush analyst Richard Anderson downgraded Hudson Pacific Properties from Outperform to Neutral and lowered the price target from $11 to $7.50.

Healthcare Realty Trust Inc (NYSE: HR) February 20, Wedbush analyst Richard Anderson downgraded Healthcare Realty Trust from Outperform to Neutral and lowered the price target from $19 to $15.

ONE BIG THING

Turmoil At Crown Castle: Who’s In Charge?

What: On February 20, Ted B. Miller, the founder of Crown Castle Inc (NYSE: CCI), who resigned as CEO in 2001 and Director in 2002, sent a letter on behalf of his investment vehicle, Boots Capital Management, to Crown Castle’s Chairman of the Board, P. Robert Bartolo. Ted Miller and his associates have a $100 million economic position in Crown Castle.

Who: Crown Castle is a Houston, TX based specialized REIT that owns, operates and leases cell towers on long-term contracts. CCI presently owns more than 40,000 cell towers, 85,000 route miles of fiber and 120,000 small cells in its portfolio. It designs and builds solutions for connectivity needs like wireless coverage and customer fiber optic networks.

In the letter, Mr. Miller nominated a slate of four nominees for the Crown Castle Board of Directors. He also stated his opposition to Crown Castle’s costly investment in data fiber and cited the recent resignations at Crown Castle as proof that the company lacks leadership. He asked that the Board put Crown Castle’s “coercive and disenfranchising agreement” with Elliott Management to a shareholder vote.

He offered a plan in which he would serve as Executive Chairman and three members of Boots Capital would serve as Board Directors. They would work with both the interim and new CEO to sell the fiber division, reinstate Crown Castle as solely a U.S. tower company, along with several other objectives, such as:

• Buyback $1.9 billion in company stock

• Run the company more efficiently

• Reduce the $6.26 per share annual dividend to $4.62, thereby reducing the payout ratio to 90% from current unsustainable levels.

• Reduce total debt to $17 billion.

Rejected: However, later that day, Crown Castle issued a statement that after careful consideration of Mr. Miller and his associates, the Board has unanimously determined not to recommend anyone from Boots Capital for election at the upcoming Annual meeting on May 22, 2024.

History: In early December, Elliott Investment Management released a letter to Crown Castles’ board, detailing its view that the company has been underperforming and called for significant changes to the board and the CEO. That news sparked a surge in Crown Castle’s share price.

Shortly thereafter, CEO/Director Jay Brown announced his retirement and was replaced by Anthony Melone, a Board member, on January 16, to serve as interim CEO/President until the board could find a permanent replacement. Elliott Investment said this was a step in the right direction.

On December 20, Crown Castle announced the addition of two new independent directors to the Board. They were Jason Genrich, a Senior Portfolio Manager at Elliott Investment and Sunit Patel, former CFO of Level-3 Communications and Executive VP of T-Mobile. The Board also announced it will conduct a review of the fiber business portion of the company.

On January 17, Crown Castle announced the appointment of Bradley E. Singer to the Board of Directors. Mr. Singer has served as COO at ValueAct Capital, among other positions.

Takeaway: Anthony Melone continues as the interim CEO and no replacement has yet been found. According to the Miller letter, the CFO resigned and then rescinded his resignation and others have left the company as well. It’s apparent that there will continue to be conflicting points of view about who should lead and what is best for Crown Castle and its shareholders. The ultimate winner for control may not be determined until the annual meeting. In the meantime, exactly who is in charge? That doesn’t seem to be very clear.

HOUSING NEWS BRIEF

Tiny Houses: Good Or Bad Investments?

What: Gen Z and Millennials are buying Tiny Houses as an alternative to the much more expensive standard sized homes.

Defined: A Tiny House by definition is any house that is less than 500 square feet, but generally they run anywhere from 100-400 square feet. They can be built on either a mobile platform or permanent foundation.

Why: Fed up with high interest rates and home prices that have yet to decline in price, may members of the Gen Z and Millennial generations are now buying Tiny Houses as their first home. Some even go on TikTok and other social media platforms to boast about all the money they’re saving on housing.

Where: Younger generations are turning to Amazon.com, where Tiny Homes range in price from around $6000 to $40,000, depending on size, type, materials, etc. They’re using the cash saved over several years that was set aside as the down payment on a larger home. Instead, they are opting for no mortgage and a simpler life.

Pros: In addition to the much lower price of the Tiny House, homeowner’s insurance and taxes are much more affordable. Insurance averages $600-$1000 per year, as opposed to the national average of $2,777. One also needs far less money to decorate and maintain the home. With the money saved on a Tiny House, one is able to invest more, or save for retirement or a better home down the road. Perhaps the Tiny House can become a rental or Airbnb property in the future.

Cons: For one thing, it remains to be seen whether these houses will appreciate or not over time. Alternative homes such as Single or Doublewide Mobile homes have been known to depreciate over time. Second, if and when the time comes to sell a Tiny House, there may be fewer prospective buyers for it, which would also tend to diminish the resale price.

Most of these Tiny Houses will be purchased by single persons or young couples without children. But what happens should they begin to have families? 400 square feet may seem suitable for one or two persons, but not for four or five. It’s also quite difficult to entertain family or friends in a house that size.

Another problem is that some towns and counties have zoning laws or building codes that require homes to have a minimum square footage larger than the Tiny House. A Tiny House on wheels may be categorized as an RV, rendering it unsuitable for year-round living.

Then there are the other costs to consider. One generally has to buy a parcel of land on which to build or move a Tiny House. Hooking up water and sewer or well/septic service is another large expense. And a Tiny House may not be insulated as well as a standard home, making energy costs higher.

Some Tiny House owners have warned others that the homes get dirty and smelly more easily and that temperature changes can create moisture and eventually mold. Appliances have to be smaller and there is less counter and storage space.

Takeaway: Desperation often leads to unsound investment decisions. And with standard homes unaffordable and rents being expensive, instead of waiting for the economic climate to change, many Gen Z and Millennials are being cajoled by social media influencers into making very bad investment decisions with Tiny Houses.

ONE FOR THE ROAD

Digital Realty Gets Unplugged

Why: Missing the analyst estimates on Q4 earnings and weaker than expected forward guidance gets Digital Realty investors quickly disconnected from their money.

Who: Digital Realty Trust (NYSE: DLR) is an Austin, TX based Data Center REIT with over 218,000 cross connects in 300 facilities across 23 countries. It has over 5000 customers, including stalwart names such as Nvidia Corp (Nasdaq: NVDA), Oracle Corp (Nasdaq: ORCL) and IBM Common Stock (NYSE: IBM).

What: After the bell on February 15, Digital Realty Trust reported Q4 2023 operating results. Funds from operations (FFO) of $1.63 missed the consensus estimate of $1.64 per share and was a decrease from $1.65 per share in Q4 2022. However, revenue of $1.40 billion beat the analysts’ estimate of $1.39 billion and was 13.54% above revenue of $1.23 billion in Q4 2022.

But then this- although full year 2024 guidance of core FFO of $6.60-$6.75 per share was ahead of $6.59 in 2023, it missed the street’s estimate of $6.83 by a wide margin. Plus, full year 2024 revenue of $5.50 billion-$5.65 billion was well below expectations of $5.76 billion.

Adding fuel to the fire, the following day, Scotiabank analyst Maher Yaghi downgraded Digital Realty from Sector Outperform to Sector Perform.

The day after the earnings report, Digital Realty sold off over 8%, from $148.61 to $136.22. By Wednesday’s close it was down to $135.53, with an intraday low of $131.42.

Takeaway: Digital Realty was up 22% over the six months prior to the Q4 earnings report. But how quickly things can change on Wall Street where analysts are kings that must be pleased, or look out below.

PRESENTED BY GROUNDFLOOR

Is Fractional Real Estate Investing The Future Of Gen Z Portfolios?

At 20% of the U.S. population, Generation Z is beginning to reshape the world of finance, shifting away from traditional investments and toward alternatives like real estate, artwork and cryptocurrencies. 

This shift is primarily driven by their financial realities: living paycheck-to-paycheck and seeking financial independence rather than more traditional markers of wealth. 

Groundfloor is tapping into this trend by offering fractional real estate investments, aligning with Gen Z's preference for accessible, technology-driven options.

For more insights into Groundfloor’s role in advancing alternative investments, visit their website.

 Benzinga readers earn a free $50 credit.