Positivity on REIT earnings calls down marginally in Q4 2022

US equity real estate investment trust officials expressed less positivity on their 2022 fourth-quarter earnings calls compared to other recent quarters, although numeric transparency grew.

The median net positivity transcript sentiment score for all US REITs was 0.76% for the fourth quarter, down a slight 9 basis points compared to the average of the prior four quarters, according to S&P Global Market Intelligence data.

Meanwhile, fourth-quarter numeric transparency scores, which measure the ratio of numbers to words, grew to 3.24%. Numeric transparency scores generally trend upward in fourth-quarter earnings calls compared to the other three quarters of the year. A higher score suggests a higher level of transparency on the earnings calls.

Market Intelligence-calculated transcript sentiment scores use natural language processing to provide a way to look at earnings call transcripts quantitatively. Net positivity scores are based on the ratio of positive to negative words used in the transcript using the Loughran & McDonald's Sentiment Word Lists, compared to the total number of words in the transcript.

Sector net positivity transcript sentiment scores

Datacenter REIT management continued to express the most positivity among the sectors on their fourth-quarter earnings calls, with a median net positivity transcript sentiment score of 1.83% — 64 basis points higher than the previous four-quarter average for the sector.

Within the datacenter sector, words used on Equinix Inc.'s fourth-quarter earnings transcript were scored at 1.76%, while Digital Realty Trust Inc.'s earnings transcript was scored at 1.90%.

The hotel sector placed second at 1.27% on a median basis, followed by the communications sector with a median of 1.15%.

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Advertising, casino, energy infrastructure, farmland and timber REITs, grouped under an "other specialty" category, held a median score of 0.50%, the lowest of any property sector. Scores for the group were down 40 basis points on a median basis compared to their previous four-quarter average.

The industrial and healthcare sectors also scored near the bottom, both at 0.55% on a median basis.

Sector numeric transparency scores

Office REITs used the most numbers relative to words during their earnings call, with a median numeric transparency score of 3.55%.

The hotel and industrial sectors followed very closely behind, with median scores of 3.54% and 3.53%, respectively.

On the other hand, the self-storage sector held the lowest numeric transparency scores, at 2.03% on a median basis. The datacenter sector followed next with a median score of 2.23%.