iREIT Daily

Commitment Is for Commoners, Not the Fed

Brad Thomas

467 postsFebruary 17, 2022

Yesterday saw another round of Federal Reserve minutes released. And some news sources are claiming it provided clarity about what to expect rate-wise from here.

I’m going to let you be the judge of that by quoting the central bank directly:

Compared with conditions in 2015 when the Committee last began a process of removing monetary policy accommodation, participants viewed that there was a much stronger outlook for growth in economic activity, substantially higher inflation, and a notably tighter labor market. Consequently, most participants suggested that a faster pace of increases in the target range for the federal funds rate than in the post-2015 period would likely be warranted should the economy evolve generally in line with the Committee’s expectations.

To me, that’s still one giant “we’re not committing to anything.” But, as always, you’re free (and encouraged) to reach your own conclusion.

The minutes did include the word “soon” (or some derivative of it) 11 times. But remember this is coming from an institution that stuck by calling inflation “transitory” up until just a few months ago.

“I think the word ‘transitory’ has different meanings to different people,” Fed Chairman Jerome Powell told the Senate in November. “To many, it carries a sense of short-lived. We tend to use it to mean it won’t leave a permanent mark…”

And, again, no timeline for rate hikes was given in the minutes. Not as far as I saw anyway.

Meanwhile, inflation continues to run rampant. That’s the bad (and absolutely obvious) news. The good news is that, apparently, consumers are consuming anyway.

January retail data came out yesterday and, as Yahoo Finance’s Morning Brief summed it up, “U.S. consumers are apparently shopping their way through soaring prices.”

More Non-REIT News to Know About

As the writeup adds, “sentiment indicators show citizens are glum about relentless inflation and other factors.” Yet they appear to be coping “by buying virtually everything in sight with near-reckless abandon.”

A classic “eat, drink, and be merry, for tomorrow you die” mentality, the article suggests it’s essentially escapism. In which case, it’s just a question of how much escaping consumers can do before there’s no more financial room to run with.

For the record, a significant portion of that spending was done online – a cautionary tale real estate investment trust (REIT) investors need to be aware of. The same goes for continuing supply chain disruptions, which are slowly easing, but still very much an issue.

With that said, U.S. businesses are relaxing Covid-related restrictions more and more, bringing the nation closer to the old normal again. Tyson Foods (TSN) will begin ending mask requirements for its vaccinated workers at certain locations. And Walmart (WMT) and Amazon (AMZN) seem to be embracing that same concept everywhere state and local laws allow.

Meanwhile, Microsoft (MSFT) and Meta Platforms/Facebook(FB) have official timelines to return fully vaccinated employees back to the office.

Of course, we’ve seen such statements before from those two. So I’ll believe it when I see it.

Speaking of Meta, I didn’t get to mention yesterday that it’s suing Great Britain. The allegation is that the country’s Competition and Markets Authority acted illegally in blocking its intended purchase of GIF database Giphy.

This all comes as Europe is hitting hard at big tech companies over anti-competitive and invasive practices. So…

Considering the general sentiment against Meta, I don’t expect it to be successful in arguing its case. But I guess when you’re between a rock and a hard place…

The World According to REITs

We don’t have The Daily REITBeat today, but there’s still plenty of news to report. Yesterday was a busy one for earnings releases, including the following four:

Equinix (EQIX) reported Q4 funds from operations (FFO) of $6.22 per share, which did miss estimates of $6.27. But that doesn’t mean it didn’t have other impressive numbers, including revenue of $1.71 billion. That was up from $1.56 billion in Q4-20 and the company’s 76th consecutive quarter of revenue growth. For the full year, revenue was $6.636 billion, up 11% over 2020. Meanwhile, operating income increased 5% to $1.108 billion.
Four Corners Property Trust (FCPT) announced Q4 FFO of $0.42 per share, up from last year’s same-quarter figure of $0.38. Net income attributable to common shareholders was $23.7 million, or $0.30 per diluted share (compared to $20.3 million and $0.27 in Q4-20). FCPT collected 99.8% of rent due for Q4 and 99.9% for the full year by December 31. And CEO Bill Lenehan added that FCPT made “over $70 million of acquisitions in the fourth quarter.”
Hersha Hospitality (HT) recorded Q4 FFO of $0.20 per share – significantly better than both expectations of $0.10 and Q4-20’s $0.23 loss. GOP margin for the comparable portfolio came in at 45%, up 150 basis points over 2019’s fourth quarter. And its 33 comparable hotel portfolio experienced 63.1% occupancy with an average daily rate (ADR) of $238.26 and revenue per available room (RevPAR) of $150.39.
Retail Opportunity Investments (ROIC) saw Q4-21 FFO of $0.25 per share, down $0.01 from expectations and $0.02 from Q4-20. Net income attributable to shareholders was $8.5 million, or $0.07 per diluted share. It spent $94.5 million acquiring grocery-anchored shopping centers. And same-center cash net operating income rose 5.6% year-over-year. Meanwhile, it ended 2021 with 100% of its debt effectively set at fixes rates.

That’s what we’ve got for today blog post!

Happy Investing

Brad Thomas

467 posts

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Brad Thomas is Senior Research Analyst at iREIT and CEO of Wide Moat Research LLC. With over 30 years of real estate experience, he is also long-time Editor of Forbes Real Estate Investor, a monthly subscription-based newsletter that dives deep into the vast world of profitable properties, and since 2021, he has served as an adjunct professor at New York University.

Thomas has also been featured on or in Forbes magazine, Kiplinger's, U.S. News and World Report, Money, NPR, Institutional Investor, GlobeStreet, CNN, Newsmax, and Fox. And he was the #1 contributing analyst on Seeking Alpha in 2014, 2015, 2016, 2017, 2018, 2019, 2020 and 2021 based on both page views and number of followers.

Thomas is the recently-published author of The Intelligent REIT Investor Guide (2021), co-author of The Intelligent REIT Investor (2016), and he wrote The Trump Factor: Unlocking The Secrets Behind The Trump Empire (2016) - all available on Amazon.

Thomas received a bachelor of science in business/economics from Presbyterian College and is married with five wonderful kids.

One Person Says the Worst Is Over

REIT Mutual Fund	Symbol
Alpine Realty Income and Growth Fund	AIGYX, AIAGX
American Century Real Estate Fund	REAIX, REACX, AREEX, AREWX, ARYCX, AREDX
Real Estate Securities Fund	MRESX
AR Capital Real Estate Income Fund	ARIAX, ARICX, ARIPX
AssetMark Real Estate Securities Fund	AFREX
Aston/Harrison Street Real Estate Fund	AARIX, ARFCX
Baron Real Estate Fund	BREIX, BREFX
BlackRock Real Estate Securities	BIREX, BAREX, BCREX
Brookfield U.S. Listed Real Estate Fund	BRUAX, BRUCX, BRUIX, BRUYX
CGM Realty Fund	CGMRX
West Loop Realty Fund	REIIX, REIAX, REICX
Cohen & Steers Institutional Realty Shares	CSRIX
Cohen & Steers Realty Income Fund	CSEIX, CSDIX, CSBIX, CSCIX
Cohen & Steers Realty Shares	CSRSX
Columbia Real Estate Equity Fund	CREAX, CREIX, CRRVX, CRERX, CREEX, CRRFX, CREWX, CRECX, CREBX
Compass EMP REC Enhanced Volatility Weighted Fund	CWRAX, CWRIX, CWRTX, CWRCX
Davis Real Estate Fund	RPFRX, DREYX, DRECX, DREBX
Delaware Real Estate Investment Trust Portfolio II	DPRTX, DPRBX
Delaware Real Estate Investment Trust Portfolio	DPREX, DPRSX, DPRRX, DPRCX
DFA Real Estate Securities Portfolio	DFREX
Dunham Real Estate Stock Fund	DAREX, DNREX, DCREX
DWS RREEF Real Estate Securities Fund	RRRRX, RRREX, RRRAX, RRRSX, RRRBX, RRRCX
DWS RREEF Real Estate Securities Income Fund	REFAX, REFCX, REFIX, REFSX
Eaton Vance Real Estate Fund	EAREX, EIREX
EII Realty Securities Fund	EIIRX
Fidelity Advisor Real Estate Fund	FHEIX, FHEAX, FHETX, FHECX, FHEBX
Fidelity Advisor Real Estate Income Fund	FRIRX, FRIQX, FRINX, FRIOX
Fidelity Real Estate Income Fund	FRIFX
Fidelity Real Estate Investment Portfolio	FRESX
Fidelity Spartan Real Estate Index Fund	FSRNX, FRXIX, FSRVX
Fidelity Series Real Estate Equity Fund	FREDX, FREFX
Fidelity Series Real Estate Income Fund	FSREX, FSRWX
Forward Real Estate Long/Short Fund	KSRYX, FRLSX, FFSRX, KSRAX, KSRCX, KSRBX
Forward Real Estate Fund	FPREX, FFREX, KREAX, KRECX
Forward Select Income Fund	KIFYX, FSIMX, FFSLX, KIFAX, KIFBX, KIFCX
Franklin Real Estate Securities Fund	FREEX, FRLAX, FRRSX, FSERX
GMO Real Estate Fund	GMORX
Goldman Sachs Real Estate Securities Fund	GREIX, GRETX, GREAX, GRESX, GRERX, GREBX, GRECX
Great-West Real Estate Fund	MXREX
Heitman REIT Fund	OARTX, OBRTX
ING Real Estate Fund	CRARX, IREWX, IDROX, CLARX, CRWRX, CRCRX, CRBCX
INVESCO Real Estate Fund	REINX, IARFX, IARIX, IARYX, IARAX, IARRX, IARCX, AARBX
Ivy Real Estate Securities Fund	IRSAX, IREIX, IRSYX, IRSRX, IREEX, IRSCX, IRSBX
John Hancock Real Estate Securities Fund	JIREX
Johnson Realty Fund	JRLTX
J.P.Morgan Realty Income Fund	URTLX, JRIRX, URTAX, URTBX, URTCX
J.P. Morgan Security Capital U.S. Core Real Estate Securities Fund	CEEAX, CEERX, CEEFX, CEESX, CEECX
J.P. Morgan U.S. Real Estate Fund	SUSIX
Lazard U.S. Realty Equity Portfolio	LREIX, LREOX
Lazard U.S. Realty Income Portfolio	LRIIX, LRIOX
Manning & Napier Real Estate Series	MNRIX, MNREX
Morgan Stanley Institutional U.S. Real Estate Portfolio	MSUSX, MUSDX, MSULX, MURSX
Natixis AEW Real Estate Fund	NRFAX, NRFYX, NRFBX, NRFCX, NRFNX
Neuberger Berman Real Estate Fund	NBRIX, NBRFX, NREAX, NRERX, NRECX, NRREX
Nuveen Real Estate Securities Fund	FREAX, FARCX, FRSSX, FREBX, FRLCX, FREGX
Oppenheimer Real Estate Fund	OREAX, OREIX, OREYX, ORENX, OREBX, ORECX
PHOCAS Real Estate Fund	PHREX
PIMCO RealEstateRealReturn Strategy Fund	PRRSX, PETPX, PETAX, PETDX, PETCX, PETBX
Pioneer Real Estate Shares	PWREX, PYREX, PCREX, PBREX
Principal Real Estate Securities Fund	PIREX, PIRPX, PREPX, PRETX, PREJX, PRRAX, PRERX, PRENX, PRAEX, PRCEX, PRLEX
ProFunds Real Estate UltraSector ProFund	REPIX
Prudential Select Real Estate Fund	SREAX
Prudential U.S. Real Estate Fund	PJEAX, PJEZX, PJECX, PJEBX
REMS Real Estate Income 50/50 Portfolio	RREIX
REMS Real Estate Value-Opportunity Fund	HLRRX, HLPPX
Rydex Real Estate Fund	RYREX, RYHRX, RYCRX
SA Real Estate Securities Fund	SAREX
SEI Institutional Mgd Real Estate Fund	SETAX, SEIRX
Spirit of America Real Estate Income & Growth Fund	SOAAX
SSgA Clarion Real Estate Fund	SSREX
Stratton Real Estate Fund	STMDX
T.Rowe Price Real Estate Fund	TRREX, PAREX
TIAA-CREF Real Estate Securities Fund	TIREX, TRRPX, TRRSX, TCREX
Vanguard REIT Index Fund	VGSNX, VGRSX, VGSLX, VGSIX
Virtus Real Estate Securities Fund	PHRAX, PHRIX, PHRCX, PHRBX

REIT ETF	Symbol
Flex Shares	ASET
Wisdom Tree Global Ex-US	DRW
S&P 500 Equal Weight	EWRE
iShares FTSE Industrial/Office	FNIO
MSCI Real Estate Index	FREL
S&P REIT Index	FRI
First Trust S&P REIT	FRI
iShares Real Estate 50	FTY
Flexshares Global	GQRE
iShares Cohen & Streers	ICF
iShares International Developed RE	IFGL
iShares US RE	IYR
Premium Yield Equity REIT	KBWY
ETRACS Monthly Pay 2x Leverage	MORL
Market Vector Mortgage	MORT
iShares Global REIT	REET
iShares FTSE Mortgage	REM
iShares Residential	REZ
IQ US Real Estate Small Cap	ROOF
iShares FTSE NAREIT Retail	RTL
DOW Jones Global RE	RWO
SPDR Dow Jones	RWR
Schwab US REIT	SCHH
Super Dividend REIT	SRET
ProShares Ultra RE	URE
Vanguard REIT	VNQ
Vanguard Global ex-US	VNQI
iShares International Developed	WPS
Wilshire US REIT	WREI
Pacer Benchmark Data & Infrastructure RE	SRVR
Pacer Benchmark Industrial RE	INDS
Pacer Benchmark Retail RE	RTL
Hoya Capital Housing	HOMZ
NetLease Corporate RE	NETL

REIT Name	Ticker	Annual Increases/yr
Federal Realty	FRT	51
Universal Health Realty	UHT	33
National Retail Properties	NNN	29
Realty Income	O	27
Tanger Outlets	SKT	26
Urstadt Biddle	UBA	25
Essex Property Trust	ESS	25
W.P.Carey	WPC	22
National Health Investors	NHI	17
Equity Lifestyle	ELS	15
Digital Realty	DLR	15

Commitment Is for Commoners, Not the Fed

Brad Thomas

467 postsFebruary 17, 2022

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