iShares U.S. Real Estate ETF [IYR] Stock Forecast

Net Lease REITs - historically one of the most "rate-sensitive" property sectors - have surprisingly been the best-performing major property sector since early 2021 despite the significant rise in interest rates. Private market values have remained far "stickier" than comparable public market assets. Increases in these REITs' cost of capital has far-outpaced cap rate increases, resulting in record-low investment spreads.

The two recent bank collapses could cause the Federal Reserve to take a break from raising rates, benefiting the real estate sector.

Amid intensifying concerns over the potential fallout from several major tech-focused bank failures, this report examines high-level REIT fundamentals to chart the likely path forward for the real estate industry. Real estate equities have been slammed particularly hard as investors draw parallels to the early stages of the 2008 financial crisis when locked-up credit markets created a cascade of distress.

For Healthcare REITs - the physical epicenter of the pandemic - the road to recovery has remained inconsistent across its distinct sub-sectors, with "private-pay" segments now showing notable improvement while "public-pay" segments relapse. Public-pay segments - Hospital and Skilled-Nursing - have seen a re-intensification of tenant operator issues amid pressure from soaring labor costs and waning government fiscal support, triggering some missed rents and lease renegotiations.

IYR ETF invests in many different REITs within the United States, primarily specialized and residential REITs. Specialized REITs may be able to hedge some economic downturn, but allocations to residential REITs remain a downside in this ETF.

There are thousands of ETFs to choose from, and today we will look deeper at an ETF that focuses on real estate via REITs. Today, we cover the iShares US Real Estate ETF.

After covering the Winners of REIT Earnings Season earlier this week, Part 2 of our Earnings Recap focuses on the worst-performing property sectors and common threads shared by these laggards. While there were upside standouts and impressive reports within these lagging property sectors, the losers of REIT earnings season included: Office, Technology, Net Lease, Regional Malls, Healthcare, and Specialty REITs.

U.S. equity markets posted their worst week of the year as benchmark interest rates jumped to three-month highs on data showing a surprising reacceleration in inflation and economic activity in January. Declining for a third straight week - a skid that follows a stretch of four-of-five weekly gains to start the year - the S&P 500 dipped 2.7% while the Nasdaq declined over 3%.

The REIT sector sharply rebounded from a tough 2022 with an +11.77% total return in January 2023. Micro cap REITs (+16.16%) saw disproportionately strong gains in January, followed by double-digit returns for small caps (+11.79%), mid caps (+11.50%) and large caps (+10.07%).

Rate hikes don't affect the whole economy as much as it affects some parts like real estate. Today's inflation figures remind us that inflation is still here, although it is still disinflation.

iShares U.S. Real Estate ETF is a US stock and trading under the symbol IYR

iShares U.S. Real Estate ETF stock price is $80.69 today.

Yes, iShares U.S. Real Estate ETF is a publicly traded company.