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REIT sector rallies toward 4th-straight record as Treasury yields fall

Tomi Kilgore

The real estate investment trust (REIT) sector rallied again toward a record high in midday trading Monday, boosted by a rally in 10-year Treasurys that pushed the yield down toward a near 2-year low. The SPDR Real Estate Select Sector ETF climbed 0.6%, as 27 of 32 components gained ground, and as 12 components reached 52-week highs, to put it on track for a 4th-straight record close. Among the more-active components, shares of Ventas Inc. climbed 1.8%, Kimco Realty Corp. rose 1.7%, HCP Inc. gained 0.9% and Host Hotels & Resorts Inc. hiked up 0.9%, while Weyerhaeuser Co. fell 0.6%. The REIT sector is often viewed as a defensive bond proxy given its relatively high dividend yield, so disappointing data that pushed Treasury yields lower can attract investors. On Monday, disappointing manufacturing and home builder sentiment data knocked the 10-year Treasury yield down 1.3 basis points to 2.080%, or well below the REIT ETF's dividend yield of 3.14%. The ETF has now rallied 7.0% over the past three months while the Dow Jones Industrial Average , which has an implied dividend yield of 2.07%, has gained 1.1%.