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REITs’ Q1 Earnings to Watch on Apr 24: UDR, CCI & Others

Zacks

The first-quarter 2017 earnings season for the real estate investment trusts (REITs) has already started. Important REITs which released their results are Prologis, Inc. PLD and SL Green Realty Corp. SLG. While Prologis came up with better-than-expected funds from operations (FFO) per share results, SL Green managed to post in-line results.

A few REITs representing different categories, which are set to release results on Apr 24, are UDR, Inc. UDR, Crown Castle International Corp. CCI, American Campus Communities, Inc. ACC, Weingarten Realty Investors WRI and Acadia Realty Trust AKR.

Despite the interest rate concern, the performance of REIT stocks depends on the individual asset class to which they cater as well as the location of their assets. In recent times, supply issues have had some repercussions in some asset classes.

According to a study by a leading commercial real estate services’ firm, in first-quarter 2017, the overall U.S. industrial real estate market remained upbeat, despite higher supply. However, declining mall traffic and store closures amid aggressive growth in online sales kept retail REITs on tenterhooks. Also, rising number of deliveries of new units in a number of key markets and elevated concession activity raised concerns for some of the residential REIT stocks. (read: 4 REITs Building Investors Hopes This Earnings Season)

Let’s have a look at what’s in store for the four REITs set to release their results for quarter ended Mar 31, 2017 monday:

For doing this, we rely on the Zacks methodology, combining a favorable Zacks Rank – Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) – and a positive Earnings ESP, to predict the chances of a beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of Zacks Rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.

UDR is slated to report its results after market close. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will deliver a positive surprise. (read: What's in Store for UDR Inc. this Earnings Season?)

United Dominion Realty Trust, Inc. Price and EPS Surprise

United Dominion Realty Trust, Inc. Price and EPS Surprise | United Dominion Realty Trust, Inc. Quote


Crown Castle, a Houston, TX-based REIT is also unlikely to come up with a beat, as it has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Austin, TX-based American Campus Communities is primarily engaged in owning, developing and managing high-quality student housing communities. The company has an Earnings ESP of +1.61% and a Zacks Rank #3. According to our proven model, the company is likely to deliver a positive surprise this quarter.

Weingarten Realty is a Houston, TX-based retail REIT which is engaged in the ownership, management, acquisition, development and redevelopment of neighborhood and community shopping centers. The company has an Earnings ESP of 0.00% and a Zacks Rank #3. Our model does not conclusively predict that the company will deliver a positive surprise.

Rye, NY-based Acadia Realty primarily focuses on the ownership, acquisition, redevelopment and management of neighborhood and community shopping centers. The company has an Earnings ESP of -2.70% and a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Strong sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Note: All EPS numbers presented in this write up represent funds from operations (FFO) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.

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