The real estate sector hasn’t gotten much love since the COVID crisis unfolded last year. Pessimism was likely warranted as employees began working from home and consumers shopped online and ate out less.
The relative chart of the Real Estate ($XLRE) versus the S&P 500 ($SPY) shows just that. Fortunately, the relationship bottomed out at the start of this year and broke out nicely from the downtrend that began last March.
We should keep a close eye on the sector if $XLRE can go on to make new relative highs from here (above the grey box).
Let’s take a look at some interesting setups in the sector in case that plays out.
Industrial Properties & Logistics ($ILPT): $ILPT has gone nowhere since it went public back in early 2018 and is building a nice base. There is room to run towards $31.4 on a sustained break above $24.5 for this industrial-focused REIT.
Regency Centers ($REG): Beaten down retail and shopping center REIT, $REG looks like it has finally absorbed all the overhead supply from 2015 and 2018 lows. Looks good as long as its above $55.5-56.
Realty Income ($O): $O is a single-tenant, triple-net lease (“NNN”) focused REIT. It has struggled to hold above $65.2 but has built a nice base there. $72.5 is my next target if it can break higher from here.
Iron Mountain ($IRM): Diversified REIT (data centers, records management, etc.) making new 2.5-year highs. $IRM can target old highs $41.4 if it can hold above $37.
Keep an eye on these names if the sector can catch a bid here. Simple levels to trade against for an unloved sector.
Cheers!