U.S. markets has shaken after President Trump announced that he and the first lady had tested positive for the coronavirus, but investors’ shock was quickly eclipsed by optimism about more stimulus. U.S. equity real estate investment trusts (REITs) responded to this by falling nearly 1.6 percent, to a low of 1,037.67, from 1,054.09 at market close yesterday. But, as of noon of Friday, October 2, they have already rebounded and stabilized at just over 1,054, as per information from the MSCI US REIT Index.
Dow Jones futures dropped by more than 400 points in Friday morning, but have fluctuated throughout the day with some rebounds. Futures tied to the Nasdaq 100 opened with a more than 200-point drop. S&P 500 futures fell by nearly 27 points so far and have jumped around since.
Mortgage REITs, which have produced some of the highest-paying dividend stocks available in the market, fell 1.18 percent Friday morning, to 173.87, from 177.74 at close last Thursday, following news of Trump’s health and the lackluster jobs figures, per information from the MVIS US Mortgage REITs Price Index. The index, though, quickly jumped back.
The President’s diagnosis reignites uncertainty about a number of things tied directly to economic performance, chief among them the presidential election as well as the possibility of a second wave slowing reopening measures.
“Initial market reactions to the news that President Trump tested positive for COVID19 are as expected — negative. However, markets could have some unexpected reactions as this could break the log jam in current stimulus negotiations,” Jamie Cox, managing partner for Harris Financial Group, wrote in commentary Friday.
Some REIT stocks — which have been battered during the pandemic — started to fall, with Simon Property Group and Vornado Realty Trust both posting a nearly 2 percent loss while SL Green Realty Corp. and Boston Properties had a nearly 1 percent decrease each. All have started to recover.
U.S. equity REITs peaked at a high of 1,358.59 on Feb. 21, before plummeting 44.2 percent to 757.71 by March 23 as a result of COVID-19, according to the MSCI US REIT Index. Over the next few months, it regained its footing, making up more than 50 percent of what was lost by June 8, before leveling out and running relatively stable through Oct. 1. Mortgage REITs have followed a similar trajectory, per information from the MVIS US Mortgage REITs Index.
“[The year] began where REITs had the highest capital and lowest leverage that they’ve had in 20 to 25 years,” Calvin Schnure, senior economist at the National Association of Real Estate Investment Trusts (Nareit), told Commercial Observer in March. “They’ve lengthened the maturities on their debt, so they don’t have a whole lot of near-term obligations. They have a lot of liquidity resources; they have cash and securities but more importantly, they have lines of credit that are enough to handle a whole year, or even several years, worth of interest payments. Most REITs are pretty well covered for handling the immediate crisis. And their operating [statistics] were good; they’ve started the year with occupancy rates at or near record highs.”