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The Zacks Analyst Blog Highlights Prologis, Alexandria Real Estate Equities, The Macerich and Innovative Industrial Properties
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For Immediate Release
Chicago, IL – December 15, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Prologis (PLD - Free Report) , Alexandria Real Estate Equities Inc. (ARE - Free Report) , The Macerich Co. (MAC - Free Report) and Innovative Industrial Properties, Inc. (IIPR - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
REITs Rejoice as Fed Indicates 3 Rate Cuts in 2024
After having a lot to worry about rate hikes in the past several months, real estate investment trust (REIT) investors now have enough reasons to rejoice. The Fed officials have held the benchmark rate steady, a move that was widely anticipated. But what was more encouraging was the signal from the Fed that it is done with rate hikes this time around and forecasting three rate cuts for next year. The dot plot further indicates another four rate cuts in 2025, lowering the rate by a full percentage point.
These rate-cut projections bring REITs to the forefront. The FTSE NAREIT U.S. Real Estate Index for all equity REITs gained 3.71% yesterday. There were increases across all asset types, with office, industrial and retail categories registering decent gains.
Notably, almost all REIT stocks, big or small and from different asset categories, including Prologis, Alexandria Real Estate Equities Inc., The Macerich Co. and Innovative Industrial Properties, Inc., moved higher.
REITs' dependence on debt for business keeps investors optimistic about their performances in a rate-cut environment as the companies benefit from lower borrowing costs. Moreover, low interest rates contribute to higher valuations. Also, their dividend yield grabs investors' attention more than yields on fixed-income and money market accounts in times like these.
Specifically, the Fed officials' median projections for the federal funds rate by the end of December 2024 is 4.6%, down from the 5.1% stated earlier, suggesting the comfort of the Fed officials with the easing of the inflation rate and the economy holding on well. With a full percentage point decline expected in 2025 and another spate of reductions in 2026, the median projection for the federal funds rate by the end of December 2026 is pegged at 2.9%, which is close to the long-run outlook.
The revised outlook also indicates reduced inflation for the current and upcoming years, with the Fed's preferred price index increasing 2.4% in 2024, excluding food and energy.
Moreover, the projections for the U.S. GDP growth rate have been upgraded to 2.6% from the 2.1% stated in September. While the GDP is expected to grow 1.4% in 2024, close to the 1.5% mentioned earlier, the projections for unemployment have been unchanged.
There are pockets of strength amid this scenario, with the REIT industry offering a real-estate structure for several economic activities — real or virtual. Investors should keep a close watch on the REIT stocks to grab solid opportunities in this special hybrid asset class.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights Prologis, Alexandria Real Estate Equities, The Macerich and Innovative Industrial Properties
For Immediate Release
Chicago, IL – December 15, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Prologis (PLD - Free Report) , Alexandria Real Estate Equities Inc. (ARE - Free Report) , The Macerich Co. (MAC - Free Report) and Innovative Industrial Properties, Inc. (IIPR - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
REITs Rejoice as Fed Indicates 3 Rate Cuts in 2024
After having a lot to worry about rate hikes in the past several months, real estate investment trust (REIT) investors now have enough reasons to rejoice. The Fed officials have held the benchmark rate steady, a move that was widely anticipated. But what was more encouraging was the signal from the Fed that it is done with rate hikes this time around and forecasting three rate cuts for next year. The dot plot further indicates another four rate cuts in 2025, lowering the rate by a full percentage point.
These rate-cut projections bring REITs to the forefront. The FTSE NAREIT U.S. Real Estate Index for all equity REITs gained 3.71% yesterday. There were increases across all asset types, with office, industrial and retail categories registering decent gains.
Notably, almost all REIT stocks, big or small and from different asset categories, including Prologis, Alexandria Real Estate Equities Inc., The Macerich Co. and Innovative Industrial Properties, Inc., moved higher.
REITs' dependence on debt for business keeps investors optimistic about their performances in a rate-cut environment as the companies benefit from lower borrowing costs. Moreover, low interest rates contribute to higher valuations. Also, their dividend yield grabs investors' attention more than yields on fixed-income and money market accounts in times like these.
Specifically, the Fed officials' median projections for the federal funds rate by the end of December 2024 is 4.6%, down from the 5.1% stated earlier, suggesting the comfort of the Fed officials with the easing of the inflation rate and the economy holding on well. With a full percentage point decline expected in 2025 and another spate of reductions in 2026, the median projection for the federal funds rate by the end of December 2026 is pegged at 2.9%, which is close to the long-run outlook.
The revised outlook also indicates reduced inflation for the current and upcoming years, with the Fed's preferred price index increasing 2.4% in 2024, excluding food and energy.
Moreover, the projections for the U.S. GDP growth rate have been upgraded to 2.6% from the 2.1% stated in September. While the GDP is expected to grow 1.4% in 2024, close to the 1.5% mentioned earlier, the projections for unemployment have been unchanged.
There are pockets of strength amid this scenario, with the REIT industry offering a real-estate structure for several economic activities — real or virtual. Investors should keep a close watch on the REIT stocks to grab solid opportunities in this special hybrid asset class.
Presently, Innovative Industrial Properties carries a Zacks Rank #2 (Buy), while Prologis, Alexandria Real Estate and Macerich carry a Zacks Rank of 3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.