REITs To Watch For Q3 Earnings On Oct 21: ELS, ACC And ADC

The Finance sector’s third-quarter earnings season has begun, with 36.8% of the group’s total market cap in the S&P 500 Index having already released their quarterly numbers. Per our earnings trends report, aggregate earnings for the Finance sector companies have declined 2.4% year over year, while revenues grew 2.9%. Nonetheless, 85.7% of these earnings have trumped EPS estimates, while 64.3% have outpaced revenue estimates. Considering the results posted by the sector at this stage in recent periods, this is an impressive proportion of positive EPS surprise.

A number of REITs are expected to release their third-quarter numbers on Oct 21, after the closing bell, including Equity Lifestyle Properties, Inc. (ELS - Free Report) , American Campus Communities, Inc. (ACC - Free Report) and Agree Realty Corporation (ADC - Free Report) .

Notably, macro-economic conditions have been encouraging for commercial and residential REITs. Specifically, low inflation, moderate economic growth and declining interest rates are likely to have driven REITs’ performance in the quarter to be reported. Further, low cost of capital has rejuvenated acquisition pipelines, facilitating external growth. In addition, the reversal of long-term interest rates, primarily due to moderating economic growth and lower inflation expectation, is anticipated to been conducive to REITs' performance.

In fact, key REIT metrics — funds from operations (FFO) per share and dividend per share — have grown in 2019. This upbeat momentum is expected to have continued in the third quarter as well.

Let’s analyze the factors that are expected to have played a key role in the above-mentioned REITs’ third-quarter performance.

Equity Lifestyle owns and operates lifestyle-oriented properties consisting primarily of manufactured home and recreational vehicle communities. This strategic portfolio composition enables the company to enjoy steady and predictable revenues.

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