Real estate stocks gained on the back of a widely expected 25 basis point rate cut this week, but the election results failed to provide optimism.

The Real Estate Select Sector SPDR Fund ETF (NYSEARCA:XLRE) gained in four out of the five trading sessions, closing the week 2.74% higher at 43.91.

A significant advance was noted on Thursday and Friday, when the ETF closed 1.24% and 1.71% higher at 43.17 and 43.91, respectively.

The Federal Open Market Committee cut its policy rate by 25 basis points to 4.50%-4.75% on Thursday, its second rate cut in a row.

"I see the Fed staying the course and cutting another 25 basis points in December and then pausing as we enter 2025," said David Alton Clark, Seeking Alpha Investing Group Leader of The Winter Warrior Investor.

On Wednesday, when Donald J. Trump was elected the 47th President of the United States after securing 270 electoral votes, XLRE closed 2.67% lower from its previous close at 42.64.

"Trump is under less pressure to subsidize construction of entry-level housing. Yet it also is hard for us to see Trump as an obstacle to more building," TD Cowen said in a recent research note relating to the impact of Trump Victory on the housing sector.

"Recap and release of Fannie and Freddie can happen under Trump though the political pressure to monetize this investment may have been greater under Harris," added the note, which sees the impact as largely positive.

The commercial real estate sector, currently struggling with surging delinquencies, record vacancy rates and elevated costs of financing, was said to be pushing for tax reliefs and incentives.

Real estate as a sector favored Trump in terms of campaign contributions, a Reuters report had noted, citing data from politics money tracker OpenSecrets.

The weakness in real estate stock performance is ironic, as Trump made his fortune mainly through real estate development, including high-profile properties like hotels, casinos, and luxury residences, along with branding and licensing his name.

The Dow Jones REIT Indx Equity REIT Total Return Index (NASDAQ:REIT:IND) added 2.58% during the course of the week.

FTSE Nareit All Equity REITs (INDEXFTSE: FNER) was up 2.31% for the week to close at 822.88, but went below the 800 mark for the first time since August on Wednesday.

The FTSE Nareit All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of the index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.

Earnings

For the week, the S&P 500 real estate stocks delivered strong quarterly results.

Iron Mountain (IRM) posted Q3 earnings and revenue beat as it makes progress toward its accelerated growth objectives and its Project Matterhorn operating model adds new services and products for its customers.

Realty Income (O) lifted the lower end of its full-year FFO guidance as it boosted its projection for Investment volume by 17%. Q3 adjusted FFO per share exceeded the Wall Street consensus by a penny.

Host Hotels & Resorts (HST) exceeded top- and bottom-line consensus.

AvalonBay Communities (AVB) posted Q3 core funds from operations that surpassed Wall Street expectations, but retreated sequentially, as same-store residential expense growth outpaced same-store revenue growth.

Other major real estate results announcements included - Starwood Property Trust's (STWD) slightly better-than-expected earnings and a weaker-than-expected Q3 earnings and revenue by Innovative Industrial Properties (IIPR).

Company News

• Digital Realty Trust (DLR) subsidiary has priced its offering of $1B aggregate principal amount of 1.875% exchangeable senior notes due 2029 in a private offering to qualified institutional buyers.
• Regency Centers (REG) declared $0.705/share quarterly dividend, 5.2% increase from prior dividend of $0.670. Other significant dividend announcements came from Weyerhaeuser (WY) and Crown Castle (CCI).
• Goldman Sachs released a list of companies with the highest passive ownership in the S&P 500 as part of a broader look at the increase of such ownership across the benchmark. Essex Property Trust (ESS), Healthpeak Properties (DOC), Federal Realty Investment Trust (FRT), Mid-America Apartment (MAA), BXP (BXP), Camden Property Trust (CPT), Kimco Realty (KIM), Extra Space Storage (EXR), Simon Property (SPG), Equity Residential (EQR) and Ventas (VTR) featured in the list, with others.

Notable Movers

Essex Property Trust (ESS), AvalonBay Communities (AVB) and UDR (UDR) were the biggest S&P 500 real estate gainers of the week. American Tower (AMT) was the biggest loser.

Residential REITs were the biggest gainers among subsectors. Here is a look at the subsector performance: