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REITs' Q4 Earnings to Watch on Jan 25: SLG, CCI, DRE & CMO

The fourth quarter earnings season for the real estate investment trusts ("REITs") is set to kick start on Jan 25. Important REITs which are expected to release their numbers tomorrow are SL Green Realty Corp.SLG , Crown Castle International Corp.CCI , Duke Realty CorporationDRE and Capstead Mortgage CorporationCMO .

The REIT space saw many ups and downs in the quarter. The greater likelihood of a rise in the rate of interest and political uncertainty sent the bond yields north. The election of Donald Trump and his aspiration for a stronger dollar augmented the chances of higher rates, translating into a rise in borrowing costs for the sector. Then finally, in Mid-December, the U.S. Federal Reserve hiked the key interest rates by 25 basis points to between 0.50-0.75%, the second hike since Dec 2015.

However, interest rates are still extremely low. According to the National Association of Real Estate Investment Trusts, despite the rate hike, performance of the REITs continues to strengthen, with robust equity issuance and low debt ratios.

Another way to look at this rise in rates is in terms of economic growth. A tightening monetary policy signals economic strength, raising the chance for an upward revision in rent and occupancy levels. This, in turn, results into a robust net operating income expansion. All these factors benefit REITs and may neutralize the impact of a high rate of interest.

In fact, per a study by the commercial real estate services' firm CBRE Group Inc. CBG , the U.S. economy is gradually gaining strength. In Dec 2016, wages increased 2.9% year over year, the highest in seven years. This growth trend is expected to continue in 2017.

Let's have a look at what's in store for the four REITs set to release their results tomorrow:

For doing this, we rely on the Zacks methodology, combining a favorable Zacks Rank - Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) - and a positive Earnings ESP , to predict the chances of a beat this quarter. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Per our proprietary methodology, Earnings ESP shows the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. Research shows that with this combination of rank and ESP, chances of a positive earnings surprise are as high as 70% for the stocks.

SL Green is slated to report its results after market close. The company has an of -1.39% and a Zacks Rank #3. Our model does not conclusively predict that the company will record a positive surprise (read more: SL Green to Report Q4 Earnings: What's in the Cards? ).

SL Green Realty Corporation Price and EPS Surprise

SL Green Realty Corporation Price and EPS Surprise | SL Green Realty Corporation Quote

Crown Castle, a Houston, TX-based REIT has an Earnings ESP of -2.70% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here . Our proven model does not conclusively show that it is likely to post a positive surprise this quarter.

Crown Castle International Corporation Price and EPS Surprise

Crown Castle International Corporation Price and EPS Surprise | Crown Castle International Corporation Quote

Indianapolis, IN-based Duke Realty has an Earnings ESP of -3.23% and a Zacks Rank #3. Our proven model does not conclusively show that it is likely to post a positive surprise this quarter.

Duke Realty Corporation Price and EPS Surprise

Duke Realty Corporation Price and EPS Surprise | Duke Realty Corporation Quote

Capstead Mortgage is a Dallas, TX-based mortgage REIT which has an Earnings ESP of 0.00% and a Zacks Rank #3. Our proven model does not conclusively show that the company is likely to post a positive surprise this quarter.

Capstead Mortgage Corporation Price and EPS Surprise

Capstead Mortgage Corporation Price and EPS Surprise | Capstead Mortgage Corporation Quote

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Crown Castle International Corporation (CCI): Free Stock Analysis Report

Capstead Mortgage Corporation (CMO): Free Stock Analysis Report

CBRE Group, Inc. (CBG): Free Stock Analysis Report

Duke Realty Corporation (DRE): Free Stock Analysis Report

SL Green Realty Corporation (SLG): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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