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REIT Q1 Earnings to Watch Out on Apr 30: PSA, VICI & More

Moumita C. Chattopadhyay

A number of REITs, including Public Storage PSA, VICI Properties Inc. VICI, Gaming and Leisure Properties, Inc. GLPI, CoreSite Realty Corporation COR and Cousins Properties Incorporated CUZ, are slated to report their first-quarter earnings numbers on Apr 30.

Per the Zacks industry classification, the REIT industry is part of the broader Finance sector. The first-quarter earnings picture looks bleak for Finance, with overall earnings projected to fall 28.4% on 2.5% higher revenues, per the latest Earnings Outlook.

The first quarter began on a positive note with a resilient economy and decent job-market strength but things got weary in the second half due to the coronavirus pandemic. However, REITs invest in all types of properties, from residential, offices, malls to hospitals, hotels and data centers, to several others. Therefore, not all of these were impacted, as the underlying asset categories and location of properties play a crucial role in determining REITs’ performance.

Let’s analyze the factors that are expected to have played a key role in these REITs’ quarterly performance.

Public Storage is slated to release first-quarter numbers after the closing bell. Our proven model does not conclusively predict a positive surprise in terms of funds from operations (FFO) per share for Public Storage this season.

The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a FFO beat. But that’s not the case here as Public Storage currently carries a Zacks Rank of 3 and has an Earnings ESP of -0.39%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Over the trailing four quarters, the company surpassed estimates on one occasion, met in another and missed in the other two, the average negative surprise being 0.17%.

The Zacks Consensus Estimate for quarterly revenues is currently pinned at $711.7 million, suggesting 3.3% year-over-year growth. The FFO per share estimate of $2.58 calls for an increase of 2.4% year on year.

Favorable demographic changes, migration and downsizing, and declining home ownership and the resultant increase in the number of people renting homes are likely to have spurred demand for Public Storage’s self-storage spaces in the March-end quarter. Acquisition and expansion initiatives are also anticipated to have stoked growth. However, deliveries are expected to have been elevated in the to-be-reported quarter, intensifying competition for the company, curbing its power to raise rents and turn on more discounting. Additionally, escalation in property tax and marketing expense are resulting in elevated expense levels. (Read more: What's in the Cards for Public Storage's Q1 Earnings?)

Public Storage Price and EPS Surprise
 

Public Storage Price and EPS Surprise

Public Storage price-eps-surprise | Public Storage Quote

VICI Properties is set to report results after the bell. Our proven model predicts a beat in terms of FFO per share for the company this season, as its carries a Zacks Rank of 3 and has an Earnings ESP of +1.6%.

In the last four quarters, this experiential REIT, which is into ownership of one of the largest portfolios of market-leading gaming, hospitality and entertainment destinations, including the world-renowned Caesars Palace, surpassed the Zacks Consensus Estimate on two occasions for as many in-line performances. It delivered an average positive surprise of 1.41% during this period.

While the company has withdrawn the 2020 guidance, it noted that all of its tenants fulfilled their rent obligations in full for April. The Zacks Consensus Estimate for the first-quarter total revenues is pegged at $253 million, indicating an 18.2% increase year on year. However, VICI Properties’ FFO per share estimate of 37 cents indicates no change during the same time frame.

VICI Properties Inc. Price and EPS Surprise
 

VICI Properties Inc. Price and EPS Surprise

VICI Properties Inc. price-eps-surprise | VICI Properties Inc. Quote

You can see the complete list of today’s Zacks #1 Rank stocks here.

CoreSite Realty Corporation is scheduled to report first-quarter 2020 results before market open. Our proven model predicts a beat in terms of FFO per share for the company this season, as its carries a Zacks Rank of 3 and has an Earnings ESP of +3.19%.

Over the trailing four quarters, the company’s FFO per share outpaced the Zacks Consensus Estimate on one occasion and missed on the other three, the average negative surprise being 0.56%.

Coresite Realty, which provides data-center products and interconnection services across eight key North American markets, is likely to have benefited from increasing demand with growth in cloud computing, Internet of Things and big data. An increasing number of companies opting for third-party IT infrastructure also acted as a tailwind. However, aggressive pricing pressure is a concern.

The Zacks Consensus Estimate for quarterly revenues is pegged at $145.9 million, indicating a year-over-year improvement of 5%. The FFO per share estimate of $1.27 suggests a year-over-year increase of 1.6%.

CoreSite Realty Corporation Price and EPS Surprise
 

CoreSite Realty Corporation Price and EPS Surprise

CoreSite Realty Corporation price-eps-surprise | CoreSite Realty Corporation Quote

Cousins Properties Incorporated will release quarterly numbers after the bell. Our proven model does not conclusively predict a positive surprise in terms of FFO per share for this REIT this season, as Cousins Properties currently carries a Zacks Rank of 3 and has an Earnings ESP of 0.00%.

In the last four quarters, the company’s FFO per share outpaced the Zacks Consensus Estimate on one occasion, met in another and missed on the other two. The average positive surprise was 0.40%.

Capitalizing on the migration trend to the Sun Belt region, Cousins Properties has enhanced its portfolio quality, while a disciplined balance sheet supports its growth efforts. These are likely to have aided the company’s performance during the March-end quarter, though stiff competition might have affected its pricing power.

The Zacks Consensus Estimate for quarterly revenues is pegged at $189.7 million, indicating a 53.8% jump year on year. However, prior to the first-quarter earnings release, there is lack of any solid catalyst for becoming optimistic about the company’s prospects. As such, the Zacks Consensus Estimate for the January-March period’s FFO per share remained unchanged at 71 cents, over the past 30 days. It also suggests a year-over-year decline of 11.3%.

Cousins Properties Incorporated Price and EPS Surprise
 

Cousins Properties Incorporated Price and EPS Surprise

Cousins Properties Incorporated price-eps-surprise | Cousins Properties Incorporated Quote

Gaming and Leisure Properties is slated to release results after market close. Our proven model does not conclusively predict a positive surprise in terms of FFO per share for this industrial REIT this season, as Gaming and Leisure Properties currently carries a Zacks Rank of 4 (Sell) and has an Earnings ESP of 0.00%.

Over the past four quarters, the company’s FFO per share beat the Zacks Consensus Estimate on two occasions and met estimates twice. The average beat was 0.88%.

The Zacks Consensus Estimate for first-quarter revenues is pegged at $289.9 million, indicating a year-over-year improvement of 0.7%. The FFO per share estimate of 86 cents suggests a year-over-year increase of 1.2%.

Gaming and Leisure Properties, Inc. Price and EPS Surprise
 

Gaming and Leisure Properties, Inc. Price and EPS Surprise

Gaming and Leisure Properties, Inc. price-eps-surprise | Gaming and Leisure Properties, Inc. Quote

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Public Storage (PSA) : Free Stock Analysis Report
 
Cousins Properties Incorporated (CUZ) : Free Stock Analysis Report
 
CoreSite Realty Corporation (COR) : Free Stock Analysis Report
 
Gaming and Leisure Properties, Inc. (GLPI) : Free Stock Analysis Report
 
VICI Properties Inc. (VICI) : Free Stock Analysis Report
 
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