Losers Of REIT Q1 2025 Earnings Season

Loser #1: Hotel REITs

Hotels: (Final Grade: C-)

• Negatives: Responsible for 7 of 9 downward FFO revisions, softness in forward booking trends amid consumer & business uncertainty, group bookings particularly soft, flattening growth in room rate inflation (Average Daily Rates), margin headwinds in 2025 resulting from higher labor costs.
• Positives: Current travel demand still holding steady per TSA Checkpoint data and hotel REIT commentary despite dip in consumer confidence, macro uncertainty drove most downward revisions, strong results and guidance hike from Host Hotels.

• FFO Guidance: 1 Raise, 2 Maintain, 7 Lower | 2025 Growth: +-17.7%
• Top Performer: Xenia Hotels (XHR): +18.2%
• Worst Performer: Sunstone Hotels (SHO): +1.2%

Our Picks: Apple Hospitality (APLE), Host Hotels (HST), Summit (INN)

Loser #2: Office REITs

Office: (Final Grade: B-)

• Negatives: Disappointing leasing volumes after very strong Q4 (lowest since Q3 2023), rent spreads and occupancy rates also resume decline after rebound in late 2024, higher interest rate expense continues to offset steadier property-level fundamentals.
• Positives: Sunbelt remains the bright spot (strong results from HIW, and CUZ), Vornado signs several large NYC leases, moderated concern on DOGE-related impacts on government office REITs (DEA, CDP).

• FFO Guidance: 3 Raise, 11 Maintain | 2025 Growth: -17.7%
• Top Performer: Orion Properties (ONL): +20.5%
• Worst Performer: Office Properties Income (OPI): -27.8%

Our Picks: Cousins (CUZ)

Loser #3: Healthcare REITs

Healthcare: (Final Grade: B+)

• Negatives: OHI reports missed rents from skilled nursing operator Genesis (5% of NOI), lab space fundamentals remain soft amid peaking supply growth, policy risk concerns for skilled nursing segment amid proposed Medicaid cuts, HR indecisive on potential dividend reduction.
• Positives: Stellar senior housing trends continued in early 2025 (WELL, AHR, and DOC all raise SHOP guidance), Guidance increase from 3/4 SNF REITs, MPW survives another day as hospital operators stabilize.

• FFO Guidance: 6 Raise, 5 Maintain, 1 Lower | 2025 Growth: +0.1%
• Top Performer: American Healthcare (AHR): +18.5%
• Worst Performer: Omega Healthcare (OHI): -5.3%

Our Picks: Sabra (SBRA), Alexandria (ARE), Global Medical (GMRE)

Loser #4: Malls

Mall: (Final Grade: B+)

• Negatives: Flat-to-negative tenant sales despite 4-5% growth in total retail sales, Occupancy rates marginally lower Y/Y excluding Simon, Concern on spending health of European & lower-end American consumer, Notable occupancy dip from Tanger.
• Positives: Strong leasing momentum (especially from MAC) despite retailer bankruptcies, positive rent growth trends, Encouraging updates from Macerich on it "Path Forward" plan, Commentary that net impact of tariffs on retailers may be positive via removal of de minimis exemption.

• FFO Guidance: 3 Maintain | 2025 Growth: +3.6%
• Top Performer: Macerich (MAC): +14.0%
• Worst Performer: Tanger Outlets (SKT): +0.4%

Our Picks: Simon Property (SPG)

Loser #5: Strip Center REITs

Strip Centers: (Final Grade: B)

• Negatives: Marginal deceleration in leasing spreads from record-highs, slight decline in occupancy rates and moderation in leasing volumes, Less bullish retail commentary amid recent uptick in store closings.
• Positives: Renewal spreads and occupancy rates still near record-highs, Strong quarter from Kite Realty after blip in Q4, demand strength from small-shops despite slumping small business confidence.

• FFO Guidance: 4 Raise, 7 Maintain | 2025 Growth: +2.8%
• Top Performer: Kite Realty (KRG): +9.6%
• Worst Performer: Whitestone REIT (WSR): -2.3%

Our Picks: Kite Realty (KRG), CTO Realty (CTO), Brixmor (BRX)

Loser #6: Manufactured Housing REITs

Manufactured Housing: (Final Grade: B-)

• Negative: Transient and Season RV segments still a significant drag, lingering Hurricane Milton impact on ELS, Sun's UK division remains a major question mark and marinas were consistently the best of SUI's non-MH segments in same-store NOI growth.
• Positive: Core Manufactured Housing ("MH") segment remains very strong, Expense guidance significantly lower on favorable insurance renewals, Sun completes sale of Safe Harbors' marina division at healthy premium to focus on core business, dividend hike from UMH.

• FFO Guidance: 2 Maintain, 1 Initiate | 2025 Growth: +-17.7%
• Top Performer: Sun Communities (SUI): +3.8%
• Worst Performer: Equity Lifestyle (ELS): +0.0%

Our Picks: Sun Communities (SUI), UMH Properties (UMH)

Loser #7: Billboard REITs

Billboard: (Final Grade: B-)

• Negatives: Mixed trends in local vs national segments: LAMR noted softness in national after politics-driven strength in Q4 (OUT reported acceleration in national segment), flat revenue growth in static billboards, weakness in gaming, restaurants, and amusement categories
• Positives: Continued strength in digital and programmatic, More robust M&A trends in 2025 (LAMR expects $150M in acquisitions, up from $45M in 2024), Continued recovery in OUT's transit segment (primarily NYC).

• FFO Guidance: 2 Maintain
• Top Performer: Outfront Media (OUT): +3.4%
• Worst Performer: Lamar Advertising (LAMR): +1.1%

Our Picks: Outfront Media (OUT)

Loser #8: Casino REITs

Casino: (Final Grade: B-)

• Negatives: Delays in GLPI's Bally's Chicago project, M&A still stuck in neutral - especially for gaming assets - after robust growth in late 2010s, Vegas convention traffic and overall visitor volumes have been sluggish in recent quarters after initial post-pandemic outperformance.
• Positives: Tenant operators remain healthy, Steady-but-modest FFO and dividend growth, GLPI dipping toes into tribal casino market, VICI credit rating upgrade by Moody's - now investment grade across all three.

• FFO Guidance: 1 Raise, 1 Maintain | 2025 Growth: +3.0%
• Top Performer: VICI Properties (VICI): +2.5%
• Worst Performer: Gaming & Leisure Properties (GLPI): -1.3%

Our Picks: Gaming & Leisure (GLPI), VICI Properties (VICI)

Loser #9: Timber & Farmland REITs

Farmland & Timber: (Final Grade: B-)

• Negatives: Tariff uncertainty negatively impacting marginal commodity demand, Lingering weakness in performance in Permanent Crops (fruits, vegetables, nuts), Lingering tenant issues in these permanent crop farms.
• Positives: U.S.-exclusive portfolios could benefit from tariffs, Strong performance in Row Crop (corn, soybeans, cotton, wheat), FPI's steady FFO outlook despite selling 1/3 of its portfolio in 2025, WY's dividend hike.

• Top Performer: Farmland Partners (FPI): +6.1%
• Worst Performer: Rayonier (RYN): -2.6%

Our Picks: Gladstone Land (LAND)

Bottom Line: Solid Earnings, No Big Surprises

Largely immune from direct trade and tariff risks, REITs are coming back into favor after three years of historic underperformance, which had driven valuations to unusually "cheap" levels. First-quarter earnings results were generally in-line with expectations, with no major downside surprises despite the period of extreme interest rate volatility in early April. While there weren't major bombshells this earnings season, Hotel REITs were responsible for 7 of the 9 downward guidance cuts this earnings season - all relatively modest downside revisions. Cold Storage and Lab Space REITs accounted for the other two downside revisions. Skilled Nursing REITs reported upside guidance revisions, but Omega's rent collection issue with Genesis sparked some renewed concerns over operator health. Tariff uncertainty weighed a bit on the commodity REIT sectors - Timber and Farmland REITs - but the sentiment remains that the net effects of the Trump trade policies on the U.S.-centric land portfolios could be positive over time. Office REIT results were also modestly disappointing as leasing volumes dipped to a six-quarter low following a very strong third and fourth quarter. Retail REITs continued to report historically strong occupancy levels and leasing spreads despite the recent uptick in retailer distress, but leasing volume softened marginally as some big-box retailers pushed leasing decisions back amid market volatility. Stay tuned for our State of REIT Nation, which will analyze first-quarter results with a focus on higher-level macro themes affecting the REIT sector at large.

 About the Author

David Auerbach boasts over two decades of experience in the securities industry, specializing as an institutional trader with a focus on Real Estate Investment Trusts (REITs), Equity and Preferred stocks, MLPs, ETFs, and Closed End Funds.

Based in Dallas, TX throughout his entire career, David currently serves as the Chief Investment Officer for Hoya Capital, managing the Hoya Housing 100 ETF (Ticker: HOMZ) and The High Yield Dividend ETF (Ticker: RIET). Previously, David held the position of Managing Director at Armada ETF Advisors, the sub-advisor for the Residential REIT ETF (Ticker: HAUS) and The Private Real Estate Strategy via Liquid REITs ETF (Ticker: PRVT).

Additionally, he acts as a consultant with IRRealized, LLC, focusing on corporate access in the REIT industry. David's industry journey includes roles at World Equity Group, Esposito Securities, and Green Street Advisors where he got his start in the REIT industry.

At Esposito Securities, he played a crucial role in building the REIT/Real Estate platform and worked extensively with institutional investors, Equity REITs, and ETF issuers.

Throughout his career, David has been quoted by reputable publications such as Bloomberg, WSJ, Financial Times, REIT.com, and GlobeSt.com. He has also made notable appearances as a featured guest on networks like Yahoo Finance, TD Ameritrade, and Bloomberg.

David holds a BBA in Finance from the University of Texas at Austin (May 1999) and an MBA in Finance from Southern Methodist University (May 2005). He maintains FINRA Series 7, 24, 55, and 63 registrations.

In his leisure time, David is an avid traveler, often found crisscrossing the country in pursuit of attending as many Phish concerts as possible.

Disclaimer

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.