Active Traders, Grab Your Notes: REIT Earnings Season 'Cheat Sheet' Is Here

On Friday, Citi Research led off its weekly REIT and lodging report with a "cheat sheet" for investors looking to play the odds on "earnings roulette."

According to Citi, "Over the last three years, REITs that out- or underperform the index on the day of their release do so by about ~130bps. Over an almost 10-year time frame, this rises to ~180-190bps, which is inclusive of the more volatile 2008/2009 period."

Here is a quick overview, as REIT 2Q15 earnings pick up momentum between now and the first week of August.

Historic Outperformance

• Mall REIT: Simon Property Group Inc (NYSE: SPG) holds a $56.6 billion cap and 3.3 percent yield
• Office REIT: Boston Properties, Inc. (NYSE: BXP) boasts a $19.25 billion cap and 2.1 percent yield

Related Link: Goldman Sachs Updates The Big Three Office REITs

Historic Underperformance

• Shopping Center REIT: Inland Real Estate Corporation (NYSE: IRC) with a $995 million cap and 5.75 percent yield
• Healthcare REIT: HCP, Inc. (NYSE: HCP) with a $17.4 billion cap and 6 percent yield

The Last 3 Years' Top Performers

• Regency Centers Corp (NYSE: REG): $5.9 billion cap, 3.1 percent yield (Subsector: Shopping Center)
• DCT Industrial Trust Inc (NYSE: DCT): $3 billion cap, 3.3 percent yield (Industrial/Warehouse)
• CorSite Realty Corp (NYSE: COR): $2.3 billion cap, 3.5 percent yield (Data Center)
• FelCor Lodging Trust Incorporated (NYSE: FCH): $1.54 billion cap, 1.5 percent yield (Hotel)
• Hersha Hospitality Trust (NYSE: HT): $1.5 billion cap, 1 percent yield (Hotel)

The Last 3 Years' Lagging Performers

HCP, Inc. makes this list as well, along with:

• Mack-Cali Realty Corp (NYSE: CLI): $1.7 billion cap, 3.1 percent yield (Suburban Office/Multifamily)
• Home Properties, Inc. (NYSE: HME): $4.25 billion cap, 4.15 percent yield (Multifamily)
• Government Properties Income Trust (NYSE: GOV): $1.34 billion cap, 9 percent yield (Office)

Related Link: Stifel Upgrades Mack-Cali

However, Citi believes that Home Properties and Mack-Cali "will move out of the basement" this quarter. Notably, Home Properties is the subject of a takeover, and CLI has a new management team in place, which Citi believes "should improve communication, expectations management and results."

Investor Takeaway

Long-term REIT investors typically do not pay attention to short-term price moves, unless there has been a change to their underlying investment thesis.

However, investors looking to establish a new position or to rebalance an existing portfolio, can benefit from being aware of these trends noted by the REIT analysts at Citi Research.

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