Apollo Commercial Real Estate Finance Inc

Real estate stocks closed the first half of 2026 with gains in four of the six months, eking out a positive June despite a hawkish Federal Reserve. The S&P 500 Real Estate Index Sector rose 0.23% month-over-month to 279.69 points, while the State Street Real Estate Select Sector SPDR ETF added 0.09% to $44.03. The Dow Jones REIT Indx Equity REIT Total Return Index advanced 1.48%, and the FTSE Nareit All Equity REITs index gained 0.81%. Office REITs and Health Care REITs were the biggest beneficiaries among subsectors, but losses in Specialized REITs and Industrial REITs weighed on overall returns. The benchmark 10-Year Treasury yield ended flat at 4.47%, easing fiscal concerns that had driven borrowing costs higher in May. Among large-cap stocks, data center REITs led weekly losers, with Iron Mountain down 10.61%, Digital Realty Trust off 9.95%, and Equinix falling 7.87%, reflecting public anxiety over electricity grid strains from AI data centers. American Healthcare REIT topped the gainers, up 8.09%, after Citi upgraded the stock to Buy. In midcaps, Compass rose 14.21% after management met with Oppenheimer, which maintained a Buy rating, while data center REIT Fermi fell 8.41%. Small-cap decliners were led by mortgage REITs Redwood Trust and Apollo Commercial Real Estate Finance, the latter downgraded by BTIG on expected book value erosion from asset sales. Newly appointed Fed Chair Kevin Warsh's hawkish comments fueled speculation that rate hikes could return, pressuring mortgage REITs near-term but potentially benefiting them from wider spreads over time.