REITs and banks ride leasing strength, lower deposit costs
Smaller REITs and regional banks report rising rents, falling funding costs, and disciplined capital allocation this week.
Coverage: 10 of 26 companies in this theme (FVR, SHO, MAC, FCCO, GOOD, UMH, LAND, FCPT, CIVB, LXP) — a sample, not the full set.
Smaller real-estate owners and regional lenders are reporting the same signal this week: leasing momentum is translating into higher rents and lower funding costs, lifting earnings without new credit stress.
FrontView REIT sold 10 properties for $22.8 million at a 7.2 % cash yield and immediately redeployed the proceeds into four new assets at 7.5 %, locking in 10-year leases. The portfolio rotation cut Dollar Tree exposure from 3.1 % to 1.8 % of annual base rent while lifting the average 5-mile population around the remaining stores by 44 % and daily traffic by 48 %. A single re-tenanting of a former Walgreens to Amazon at flat rent but with 2 % annual escalators and no tenant-improvement outlay shows how quickly capital can be recycled into higher-yielding, longer-duration cash flows.
Macerich is seeing the same pattern at scale. Occupancy in its Go-Forward Portfolio reached 94.5 % at quarter-end, while sales per square foot rose to $941 and traffic hit 7.8 million visitors per center. The company signed 7.1 million square feet of leases in 2025—an 85 % jump over 2024—and now has $120 million of signed-not-open revenue that will flow through 2028. Thirty anchor replacements totaling 2.9 million square feet are committed and expected to generate $750 million in annual sales when they open over the next three years. The result: Macerich has already cut pro-forma leverage by 1.5 turns and is on track to reach 6.0× by 2028.
LXP Industrial Trust executed 4.6 million square feet of leases in the first half of 2026, pushing cash base rents on second-generation space up 22 %. A single $103 million acquisition in Phoenix carries a 15.7 % initial cash yield and 2 % annual escalators, lifting the midpoint of 2026 Adjusted Company FFO guidance to $3.35 per share. Four Corners Property Trust is diversifying away from Darden restaurants with a $268 million veterinary-portfolio acquisition that will cut Darden exposure to 41 % of annual base rent and raise medical retail to 16 %. The deal is funded by a $200 million delayed-draw term loan priced at SOFR + 1.25 %, or roughly 4.9 % all-in.
On the banking side, First Community and Civista Bancshares are reporting the mirror image: deposit costs are falling faster than loan yields, widening net-interest margins. First Community’s total deposit cost fell 11 basis points to 1.80 % in the first quarter, while non-interest-bearing deposits held steady at 27 % of the total. The bank has now posted eight consecutive quarters of NIM expansion, even after purchase-accounting amortization shaved 12 basis points off loan yields. Civista’s NIM widened 34 basis points year-over-year to 3.85 %, driving record net interest income of $37.8 million and a 1.41 % return on average assets. Both banks are running loan-to-deposit ratios below 93 % and have zero brokered CDs.
Credit quality remains benign. Civista’s non-performing loans are 93 basis points of total loans, and its office exposure is concentrated in central business districts at 6 % of the portfolio. First Community’s CRE book is 314 % of risk-based capital, but the bank has grown loans 13 % annualized without adding brokered funding. The common thread: disciplined capital allocation—whether through share buybacks at Sunstone, portfolio pruning at FrontView, or delayed-draw debt at Four Corners—is keeping leverage stable while rents and spreads expand.