In an analysis of 118 US equity real estate investment trusts, 72 reported earnings above their respective consensus estimates for funds from operations per share for the first quarter of 2024, while 22 posted funds from operations per share in line with their consensus estimates and 24 fell short.
The analysis included REITs that trade on the Nasdaq, NYSE or NYSE American with market caps greater than $200 million and three or more S&P Capital IQ consensus estimates for funds from operations (FFO) per share for the three months ended March 31, 2024. 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, 18, or 78.3%, of the 23 retail REITs surpassed their consensus FFO-per-share estimates for the quarter. Additionally, 12, or 75%, of the 16 office REITs beat their FFO per share estimates for the quarter. The hotel and diversified sectors followed, each with two-thirds of the REITs topping their consensus earnings estimates.
Largest earnings beats
Farmland REIT Farmland Partners Inc. reported adjusted FFO (AFFO) at $2.8 million, or 6 cents per share, much higher than the REIT's consensus estimate for the quarter of 1 cent per share. Farmland Partners' AFFO was positively impacted by approximately $1.2 million of income from forfeited deposits due to the termination of a repurchase agreement.
Diversified REIT Alexander & Baldwin Inc. came in second, reporting FFO of 40 cents per share for the first quarter, 53.8% higher than its consensus estimate of 26 cents per share. According to the REIT's earnings release, its FFO per share for the quarter benefited from a higher land operations margin, mainly driven by the sale of about 330 acres of land holdings.
Office REIT SL Green Realty Corp. was third, reporting FFO per share of $3.07, 40.8% above its consensus estimate of $2.18. The office REIT's FFO for the quarter included $141.7 million, or $2.02 per share, of gain on discounted debt extinguishment at its 2 Herald Square property in New York City.
Two hotel REITs rounded out the top five. Pebblebrook Hotel Trust topped its consensus earnings estimate by 40%, while Summit Hotel Properties Inc. beat its consensus estimate by 26.3%.
– For further earnings research, try the Real Estate Beats and Misses Excel template.
– Set email alerts for future Data Dispatch articles.
Largest earnings misses
Conversely, Service Properties Trust reported normalized FFO of 13 cents per share for the first quarter, 31.6% below its consensus estimate of 19 cents per share. On its earnings call, the REIT's management noted earnings for the quarter were impacted by higher interest expense as well as a decline in hotel EBITDA.
Communications REIT SBA Communications Corp. was next, reporting FFO per share of $2.51, 19.6% below its consensus estimate of $3.12 per share. However, the REIT's reported AFFO of $3.29 per share marked a 5.1% increase year over year and was largely in line with the REIT's expectations, according to its first-quarter earnings call.
Regional mall REIT Macerich Co. reported FFO per share of 33 cents for the first quarter, 15.4% below the mall REIT's consensus estimate of 39 cents per share for the quarter. Macerich CFO Scott Kingsmore on the company's first-quarter earnings call said one major factor contributing to the lower FFO per share for the quarter stemmed from Express Inc.'s bankruptcy filing. Other factors included one-time nonrecurring costs associated with the REIT's recent leadership transition, reductions in lease termination income, decreases in straight-line rents and declines in the REIT's on-premise advertising business.
