The Real Estate sector was a surprise leader last week, but mainly drifted in Q3. The SPDR Real Estate Sector ETF (NYSEARCA:XLRE) rose 1.3% over the three months.
The best-performing stocks remained those that were resistant to the pandemic economy and lockdown measure, led by Weyerhauser (NYSE:WY), which jumped on the housing sector surge and the unprecedented spike in lumber prices.
Weyerhauser rose 26.6% in Q3. The Fed promising near-zero rates for as long as takes and people moving out of major urban areas supported a strong housing rebound. Add in mill closing due to lockdowns and disruptions in the supply chain creating supply shortages and fairly illiquid lumber futures rose to record highs. Futures (LB1:COM) were up as much as 125% in Q3 before a sharp September selloff cut gains to 40%.
It was followed by storage REITs Public Storage (NYSE:PSA), up 16.9%, and Extra Space Storage (NYSE:EXR), which gained 15.8%. Storage companies have also shown resilience, with rents payments more assured with items in storage acting as a kind of collateral.
The weakest stocks were a combination of exposure to the shutdown retail sector and the drop in demand for living in the big city.
Shopping center REIT Regency Centers (NASDAQ:REG) struggled the most, falling 17.2% in Q3. It was followed by Federal Realty (NYSE:FRT), which holds retail properties in major coastal cities, down 13.8%.
Residential REITS followed. UDR (NYSE:UDR), focused on large-market residential, and Equity Residential (NYSE:EQR), with urban rental exposure, both fell 12.8%. West coast housing REIT Essex Property Trust (NYSE:ESS) dropped 12.4%.
See the top REITs ranked by Quant Ratings.