If you've ever been a landlord, you know finding reliable tenants is everything. Tracking down late payments every month makes your passive income stream unreliable. This is why real estate investment trusts (REITs) have become such an attractive option for investors looking for passive income. Unfortunately, 2022 has been a tough year for equity REITs.
real estate was one of the worst-performing sectors in 2022, as rising interest rates and low demand pummeled both residential and commercial markets. Equity REIT returns saw the steepest decline this year since the great financial crisis, with the FTSE Nareit All Equity REITs index dropping more than 18% year-to-date.
investors will remember 2022 as a really tough year for Wall Street. Inflation, rising interest rates, a war in Ukraine and fears of a recession all contributed to the market's volatility. REIT stocks overall trailed the S&P 500 during 2022 as the Federal Reserve's aggressive rate hikes made borrowing more expensive and reduced the appeal of real estate investment.
Ares Commercial real estate Corp. (NYSE: ACRE) is a mortgage real estate investment trust (mREIT) now going for just 78% of book value. The company has been hit hard this year, with the stock price down more than 30% year-to-date. Despite the challenging market conditions, Ares Commercial real estate Corp. has managed to remain profitable, with a net income of $27.5 million in the third quarter of 2022.
Evaluating relative strength is important when determining which stocks to buy. Relative strength shows which sectors or individual issues have been outperforming the market, and which have been underperforming. In the case of Ares Commercial real estate Corp., the stock has an RS rating of 36, which is below the industry average of 41. This indicates that the stock has been underperforming its peers in the mortgage REIT sector.
2022 has been a rough year for most investors; that's unless you only held energy stocks. As a matter of fact, 2022 was the first time in history that the energy sector outperformed the S&P 500. But even the energy sector wasn't able to make up for the losses in other sectors, such as real estate.
real estate investment trusts (REITs) continue to weaken, with a number of them hitting new 12-month lows. These reflect the negative sentiment in the market and the fact that investors are fleeing to safer investment, such as bonds and gold.
REITs are typically viewed as a safe and reliable investment, with the potential for steady income. But with interest rates on the rise and the market in a volatile state, REITs have become a much riskier investment. investors should be wary of REITs and do their due diligence before investing.
Despite the challenging market conditions, there are still some REITs that have managed to outperform the market in 2022. These include companies such as American Realty Capital Properties (ARCP) and Vornado Realty Trust (NYSE:VNO), which have both seen their stocks rise more than 30% year-to-date.
investors should be aware that the market for REITs is highly cyclical and unpredictable. As interest rates rise, REITs will become less attractive investment, and their stock prices could suffer. However, for investors who are willing to take on some risk, REITs can still offer an attractive source of income.
For those investors looking for income, REITs can still be a viable option, provided they are chosen wisely. investors should look for REITs with strong fundamentals, such as low debt-to-equity ratios and strong dividend yields. They should also look for REITs that have been outperforming their peers.
investing in REITs is not for the faint of heart. investors should be aware of the risk involved and should do their due diligence before investing. But for those investors who are willing to take on some risk, REITs can still offer an attractive source of income.
With the market in a state of flux, it is more important than ever for investors to be proactive and to do their research before investing. Equity REITs can still be a viable option for income-seeking investors, as long as they are chosen wisely.
2022 was a tough year for equity REITs, but it is not the end of the world. investors should be aware of the risk involved and do their due diligence before investing. By choosing REITs with strong fundamentals and relative strength, investors can still benefit from the income potential of REITs.
