New Exchange-Traded Fund Invests Directly in Housing REITs

Betting that the surge in housing prices in high-demand markets will continue unabated for several years, Armada ETF Advisors has unveiled what it says is the first active, pure-play exchange-traded fund that invests directly in publicly traded residential REITs.

Unlike other real estate-oriented ETFs that invest in stocks associated with real estate, the new Home Appreciation US REIT ETF (HAUS) launched by Armada in partnership with Tidal ETF Services gives investors access to residential REITs.

HAUS will invest in publicly traded REITs that derive at least 75% of their revenue from ownership and/or management of residential properties including multifamily housing, manufactured housing, SFR or senior housing.

David Auerbach, Dallas-based managing director at Armada, cited “a sustained, structural housing shortage” and inflation driving housing costs as two factors that will generate a strong ROI on investments in residential REITs.

 “With inflation near record highs, a real estate allocation provides diversification to a traditional stock/bond portfolio,” Auerbach said, in a statement. “Through its underlying REIT investments, HAUS offers investors potential additional income benefits, including quarterly dividend payouts and potential appreciation.”

To guide the new fund’s investments, Armada announced it has formed a sector-specific Advisory Board composed of high-profile CRE veterans with extensive experience in publicly traded residential REITs.

In an interview with the Dallas Business Journal following the HAUS ETF launch, Auerbach said he expects home prices, demand and rental rates to continue to soar in the Dallas metroplex for the next 5 to 10 years. 

“Until we have a property value reset or some major structural shifts, there’s going to be no letup in sight,” he told the Journal.

Auerbach said the HAUS fund is structured to make targeted investments during an unprecedented and massive supply-demand balance nationwide and in reaction to a migrating population. He explained that the structure of the HAUS fund enables Armada to “actively position this portfolio to go where the people are relocating,” according to the Journal report.

Dallas is one of the nation’s hottest—and tightest—housing markets, with home prices, for resale and new construction, up by more than 20 percent and apartment rents on a similar trajectory.

Dallas is also a millennial magnet with a thriving 24/7 tech hub emerging in the historic Deep Ellum district, now home to Uber’s US administrative hub. The city also is making a bid to unseat Houston as the headquarters in Texas, luring several HQs in the past two years, along with thousands of new workers requiring new housing.