Is Single Family Rental Rate Growth Decelerating in the Back Half of 2022?
The September run-up in interest rates currently has the conventional 30-year mortgage rate trending near 6.5%.
The spike in mortgage rates has only put more pressure on the affordability picture, with renting continuing to be the more attractive option relative to purchasing a home. As a result, this dynamic continues to fuel strong demand for rentals and persisting strength in leasing momentum for the single-family REITs.
Even after going through a strong peak leasing season, the single-family REITs continue to operate from a position of strength. The persisting record low turnover rates have kept occupancy levels near historical highs, as many residents are opting to renew leases over testing the market with the risk of signing at a higher market rental rate.
The strong leasing momentum could present more revenue upside potential if seasonality on new lease rates does not return in full force.
The proportion of patients starting GLP or GIP-GLP treatment without prior diabetes treatment has risen substantially in recent quarters. Our analysis accords well with historical Novo Nordisk's Wegovy in '21 and Eli Lilly's Mounjaro in '22 commentary and brings the data forward to look at 1Q 2023.
The European utility sector has seen little differentiation in performance across the past three months, with a 9% increase in absolute terms and a 5% outperformance versus the MSCI Europe. Energy prices have fallen, but windfall taxes and price caps introduced in 2022 could limit near-term negative earnings per share (EPS) momentum. But the sector has already de-rated to reflect this.
With the European Green Deal announced in 2019, Europe was the first to declare its ambition to be a climate-neutral continent. COVID-19 and the complexities of European green subsidies meant that considerable funds are still to be deployed. In the meantime, the US Inflation Reduction Act (announced in July 2022) has received significant attention owing to the simplicity of the mechanism and the potential for a more favourable policy to attract investment into the country. This policy move has prompted the European Commission to respond with the proposed Green Deal Industrial Plan (“GDIP”) to mobilise various forms of state aid for the green transition.