In an analysis of 116 US equity real estate investment trusts, 78, or 67.2%, reported funds from operations per share above their respective consensus estimates for the second quarter of 2024.
About 19% — 22 REITs — reported funds from operations (FFO) per share in line with their consensus estimates, while 13.8% — 16 REITs — fell short.
The analysis included equity REITs that trade on the Nasdaq, NYSE or NYSE American with market capitalization greater than $200 million and with three or more S&P Capital IQ consensus estimates for FFO per share for the three months ended June 30.
Earnings beats and misses are calculated using as-reported operating FFO-per-share values, which are sometimes referred to as normalized FFO or core FFO. Nareit-defined FFO was used instead for REITs that do not report operating FFO. Nareit is the US-based trade association for REITs and publicly traded real estate companies.
By property sector, both datacenter REITs in the analysis topped their consensus FFO-per-share estimates for the second quarter. Additionally, 10 of the 12 analyzed hotel REITs surpassed their consensus FFO-per-share estimates along with eight of the 10 industrial REITs.
Largest earnings beats
Diversified Healthcare Trust reported normalized FFO of 3 cents per share, one cent higher than the healthcare REIT's consensus estimate for the quarter of 2 cents per share. The 50% relative beat marked the largest within the equity REIT sector for the quarter.
On Diversified Healthcare Trust's second-quarter earnings call, CEO Christopher Bilotto attributed the strong earnings results to continued improvement in the REIT's seniors housing portfolio, with same-store net operating income up 27% year over year. Additionally, the REIT grew rents in its medical office and life sciences segment by double-digits.
Multifamily REIT Veris Residential Inc. placed second, reporting core FFO of 18 cents per share, 28.6% above its consensus estimate of 14 cents per share for the quarter. The increase in core FFO was primarily driven by three factors: the receipt of an early annual tax credit amounting to $2.6 million, $1 million in interest income from cash on hand and another $1 million from the recognition of a successful real estate tax appeal for three properties sold in 2023, Veris CFO Amanda Lombard said on the REIT's second-quarter earnings call.
Office REIT SL Green Realty Corp. ranked third, topping its second-quarter FFO-per-share estimate by 24.2%.
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Largest earnings misses
Farmland Partners Inc. reported adjusted FFO at 1 cent per share, just short of its two-cent-per-share consensus FFO estimate for the second quarter.
Communications REIT SBA Communications Corp. reported FFO per share at $2.35 for the second quarter, 26.3% short of its consensus estimate of $3.19 per share.
Healthcare REIT Community Healthcare Trust Inc. followed next, reporting FFO of 43 cents per share, 21.8% below its consensus estimate of 55 cents per share for the recent quarter. Community Healthcare Trust's FFO was negatively impacted by the reversal of $1.9 million of rent, as well as the reversal of $1.4 million of operating interest, which combined to reduce the REIT's total revenue in the second quarter by about $3.2 million, CFO William Monroe said on a call to discuss the company's second-quarter earnings.
