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Over the past couple of months, we’ve seen a drop in retail sales. Part of this is due to falling gasoline prices, but even stripping that out, sales have been lackluster.
General Growth Properties (GGP) reported that funds from operations increased from 29 cents a share in the prior year’s corresponding quarter to 33 cents last quarter, an increase of 13%.
We’ll address General Growth Properties’ view of the landscape regarding online retailers. The company is surprisingly sanguine about this source of competition.
Mortgage REIT investors have finally received a taste of what interest rate risk looks like over the past year. For most of the past 30 years, bonds have been a one-way bet, with rates generally falling from high tens to zero.
Leverage increases risk by magnifying returns Agency REITs like American Capital Agency (AGNC), Annaly (NLY), MFA Financial (MFA), Hatteras (HTS), and Capstead (CMO) invest in mortgage-backed securities, or MBS, which…
Most corporations loathe cutting their dividend because of the message it sends to Wall Street. So volatile dividends are generally rare. But for REITs, they’re a fact of life.
Since REITs are financials, they tend to trade off of two important metrics—dividend yield and book value per share. Dividend yield is typically why investors buy REITs in the first place.
American Capital Agency is one of the biggest REITs in the U.S. by market capitalization. Annaly Capital Management is the other. As such, AGNC is one of the biggest ultimate lenders in the mortgage market.
The ten-year bond sold off, with yields increasing from 2.19% to 2.27%. Ginnie Mae TBAs followed, dropping from 104 23/32 to 104 20/32.
Fannie Mae MBS fell slightly as the bond market sold off as investors added risk. The Fannie Mae 3.5% TBA started the week at 103 24/32 and lost a quarter to close at 103 16/32.
The ten-year bond influences everything from mortgage rates to corporate debt. It’s now the benchmark for long-term U.S. interest rates.
FHFA Chairman Mel Watt discussed ways to increase access to credit, particularly for the first time-homebuyer. Probably the biggest one was a proposal to allow 3% down Fannie Mae loans.
We have a big week ahead, with the FOMC meeting and a slew of earnings from REIT heavyweights like American Capital Agency (AGNC) and General Growth Properties.
Simon Property Group’s (SPG) management has stressed that despite disappointing retail sales, the company was still able to drive revenue growth.
U.S. malls and shopping centers account for ~80% of Simon Property Group’s net operating income. The next biggest portion is its international properties.
Simon Property Group (SPG) generated funds from operations, or FFOs, of $689.4 million,—$1.90 per diluted share. These funds compare to $783.8 million, or $2.16 per diluted share, in 2Q13.
Simon Property Group is by far the biggest shopping center REIT in the U.S., with a market capitalization of $53 billion. The next biggest REITs are less than half Simon’s size.
Mortgage REIT investors have finally gotten a taste of what interest rate risk looks like over the past year. For most of the past 30 years, bonds have been a one-way bet.
This also means a REIT will experience a volatile dividend. Most corporations loathe cutting their dividend because of the message it sends to Wall Street, so volatile dividends are generally rare. For REITs, they’re a fact of life.