REITs hit fresh 52-week lows this week as sector transparency continues

Weakness in the real estate investment trust (REIT) sector continues as investors dump stocks.

Relentless selling this week was enough to push these three REITs to new 52-week lows. It’s not a bullish sign for the team that the trend seems to be irretrievably downward this year.

Investors might think that with yields retreating from their highs of a few weeks ago, these REITs would at least enter “rally relief” mode. But no. They could also conclude that the 30-year mortgage rate falling from highs just weeks ago would boost markets in this normally rate-sensitive sector. Not again.

Here is the point-and-number chart of the CBOE 10-year US Treasury yield:

Take a look at how performance is headed lower.

Here is the dot-and-number chart for the average 30-year fixed-rate mortgage in the USA:

The yield on it, which is widely followed among mortgage analysts, reached 7 and is now lower.

Under these circumstances, the following REITs may have started to perform more favorably.

Here is the daily price chart for Broadmark Realty Capital Inc. (NYSE: BRMK):

This is a new 52-week low, and the REIT continues to trade well below its 50-day declining moving average and 200-day declining moving average. Broadmark is trading at half its book value with a price-to-earnings ratio of 9.8. The company pays a dividend of 19.31%, which may be difficult to sustain in the current economic climate.

So the daily price chart looks for Douglas Emmett Inc. (NYSE: DEI)

The REIT fell to a 52-week low at the open and rallied, but not enough to close with a profit for the day. Douglas Emmett operates in the office buildings sector and is now trading at 1.11 times book with a price-to-earnings ratio of 31. The company pays a dividend of 6.89%.

Here is the daily price chart for Granite Point Mortgage Trust Inc. (NYSE: GPMT):

It retreated at the open, set a new 52-week low, and then traded higher and did not return to the November 16 low. The REIT is struggling to get above its 50-day moving average and stay there. The 200-day moving average continues to decline.

Granite Point is a mortgage REIT now trading at $0.30 and paying a dividend of 17.67%, another high paying REIT that is unlikely to stay at that level.

Other REITs have reacted somewhat better to the recent slight decline in interest rates, but these three and a few others remain in decline.

REITs are one of the most misunderstood investment options, making it difficult for investors to spot incredible opportunities until it’s too late. Benzinga’s in-house real estate research team works hard to identify the greatest opportunities in today’s market, which you can access for free by signing up to Benzinga Weekly REIT Report.

Not investment advice. For educational purposes only.

Charts courtesy of StockCharts

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