The ALPS REIT Dividend Dogs ETF (RDOG) gained 4.88% last week, outpacing the broader REIT market and the U.S. equities market.
RDOG was propelled by a slew of positive earnings for its underlying REITs, as well as positive sentiment around “peak” inflation that may slow the Fed’s tightening cycle, ALPS wrote in a recent insight.
With the lower July CPI print, REITs have rebounded from their relative bottom set in June as long-term interest rates have also fallen in conjunction with lower inflationary expectations for the future. While REITs tend to act more defensively during inflationary periods due to their CPI rental rate adjustments each year, lower long-term interest rates allow REITs more financing flexibility with their property acquisitions and remodels, according to ALPS. Prices for rents still increased by 0.7% sequentially from June and 5.7% higher year-over-year.
Each of RDOG’s nine REIT segments saw positive returns last week, led by its Hotels & Resort REITs. Service Properties Trust (SVC, 2.82% weight as of August 12) returned 11.40% last week after a follow-on earning’s rally in which the company boosted its liquidity with the sale of 60 hotels to put it back into compliance with its debt covenants, according to ALPS. Also contributing to last week’s return was hotel operator RLJ Lodging Trust (RLJ, 2.31% weight as of August 12), which rallied nearly 8% after stellar funds-from-operations (FFO) earnings the week prior on increasing U.S. business travel.
According to ALPS, within RDOG’s office REITs segment, Vornado Realty Trust (VNO, 2.13% weight as of August 12) jumped over 10% last week after a Bloomberg analyst cited higher-quality buildings garnering the bulk of U.S. office space demand with above-average occupancy and pricing power. SL Green Realty (SLG, 2.09% weight as of August 12) also rallied over 8.50% last week on the positive sentiment around higher-quality office space for its properties in Manhattan, according to ALPS.
RDOG offers U.S. exposure. Investors looking for global exposure may consider the Cambria Global Real Estate ETF (BLDG) and the DBX ETF Trust – Xtrackers International Real Estate ETF (HAUZ).
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