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REIT Replay: Texas two-step

REITsoutperformed the largely flat broader markets in May 5 trading, as companiescontinued to report first-quarter 2016 earnings.

TheMSCI US REIT Index (RMZ) rose 0.24% to 1,169.26, and the SNL US REIT EquityIndex rose 0.29% to 311.60. The Dow Jones Industrial Average rose 0.05% to17,660.71, while the S&P 500 fell 0.02% to 2,050.63.

Commercialreal estate in Dallas and San Antonio should remain "fairly insulated"from the effects of declining oil prices, but "pockets of vulnerability"are appearing in the Houston multifamily and office markets, Morningstar CreditRatings LLC analysts said in a report.

Despitemore than 75,000 lost jobs in the mining, logging and manufacturing industriesin Texas in 2015, "the oil-market bust has had a muted effect oncommercial property markets" in the state, the analysts found, noting thatpopulation growth has helped drive economic growth.

WhileHouston is known for its oil-industry ties, many of the city's top employersactually are in the health care industry, the analysts noted. Still, theyadded, "some cracks are appearing" in the local commercial realestate market. Houston office vacancies averaged 14.4% in the 2016 firstquarter, a 2.5 percentage point increase from the period a year earlier and alevel not seen since the third quarter of 2005, the analysts said, citingCoStar data.

completed astrategic review andopted against a plan to divide its diversified portfolio into "morefocused entities," the company said.

Thereview, which launched in November 2015, yielded a six-point plan focused ongrowth, diversification, operational efficiency, transparency, proactive assetmanagement and balance sheet strength and flexibility. The company alsoidentified annualized pretax estimated cost reductions of $20 million.

W. P.Carey shares fell 0.99% to $61.86.

CEO Glenn Rufrano wasnoncommittal in an earnings conference call about a potential sale of ColeCapital Corp., the nontraded REIT sponsor the company owns.

Rufranodescribed companyleadership's thoughts on the business as "not a like or a dislike,"adding, "We're business people who look at assets, and we look at value. Acommon theme around here is that whatever asset we have, if you want to pay usa lot for it, we'll consider it."

Thoughmanagement is pleased with Cole's improvements in sales productivity, "Wethink there's some room to go," he added.

Rufrano'scomments followed the release of the company's first-quarter , in which it reported a declinein per-share AFFO attributable to common stockholders and limited partners, to20.7 cents from 21.5 cents a year earlier, and a gain in per-share FFOattributable to common stockholders and limited partners, to 21.1 cents from21.0 cents.

VEREITshares rose 2.62% to $9.39.

CEOChristopher Volk acknowledgedrecent retailer weakness but said in an earnings conference call that he seesno sign of "current or pending recessionary pressures."

Thecompany was "built to address tenant insolvencies and real estatevacancies," he said, noting that it closed the first quarter with 99.9%occupancy.

STORECapital Corp. shares fell 0.49% to $26.46.

closed thesale of U.S. recordsand information management facilities formerly owned by Recall Holdings Ltd.for roughly $80 million, satisfying a U.S. Department of Justice requirementfor approval of Iron Mountain's acquisition of the Australia-based Recall.

Theassets are located in 13 cities, and the sale represents the initial U.S.divestments related to the deal. Certain Recall facilities in Atlanta andSeattle, which must also be sold, were not included in the transaction.

IronMountain closed the Recall acquisition in a roughly $2 billion deal on May 2.

IronMountain shares rose 0.46% to $37.27.

executives said thecompany will buy back shares "aggressively," despite concerns aboutshrinking the company.

Thecompany's repurchase plans stem from a roughly nine-month strategic review, andrepresent a change of direction from past comments that Chairman and CEO MontyBennet made expressing reservations that buybacks could hurt liquidity.

ThoughBennett said in an earnings conference call that his concerns persist, he addedthat repurchases are the right choice at the moment.

Healso argued that the company's decision not to sell itself during the strategicreview served shareholders' best interests — and demonstrated company leaders'selflessness.

"Asyou know, we have a lot of money tied up in this ourselves, a significantamount of money," Bennett said. "A sale transaction would pay a lotof money over to Ashford Inc., which I personally own a lot of, and it would bea fantastic personal transaction for me, as it would enrich me immensely.However, we just don't think, the independents don't think, and I agree withthem, that that's not in the best course of action for the shareholders at thispoint in time."

AshfordHospitality Prime shares rose 2.32% to $11.93.

RevPARin U.S. hotels edged2.2% higher in the week ended April 30, ADR rose 0.6%, and occupancy rose 1.5%,STR Inc. reported.

St.Louis, Mo.-Ill. posted the largest RevPAR gain of the top 25 markets, at 27.0%.Following closely were the Norfolk/Virginia Beach, Va., and Tampa/St. Petersburg,Fla., with gains of 24.5% and 18.6%, respectively.

SanFrancisco/San Mateo, Calif., and New York City were the only two markets thatexperienced double-digit decreases in RevPAR, down 10.8% and 10.1%,respectively, during the week.

Now featured on SNL

: Thisroundup of recent guidance from real estate companies includes updates fromVEREIT, W. P. Carey and Chatham Lodging.

: This roundupof recent guidance from real estate companies includes updates from FederalRealty, Corrections Corp. and Mid-America Apartment.

: Bankers in oil-richmarkets acknowledge there is stress in their energy loan portfolios, but theyare holding firm that they have not seen contagion spread to other areas yet.

: This feature presents a weeklyrundown of recent significant management and board changes and personnel movesin the North American real estate industry, including U.S. REITs and REOCs,homebuilders, and gaming operators.

: The May 5 North American property news roundup alsofeatures City Office REIT's sale of an Allentown, Pa., property for $44.5million.

Market prices and indexvalues are current as of the time of publication and are subject to change.