iREIT Daily

A Major Acquisition, Activist Anger, and REITs Are Right Where We Want to Be

Brad Thomas

467 postsJanuary 19, 2022

The news available for putting together Tuesday’s blog post was pleasantly sparse. But that’s just not the case today.

Today, I don’t think I can fit everything in here that I want to, try though I will. That’s why I’m going to start with a bullet-point summary of certain stories, such as how:

Activision Blizzard (ATVI) jumped 25% yesterday after Microsoft (MSFT) said it will purchase the legendary but beleaguered gaming company. Fascinating enough, CEO Bobby Kotick – who’s been blamed for the stock’s tumble these past months over allowing a hostile corporate work environment – will continue to serve as CEO.
We already knew Macellum Capital Management wasn’t happy with how Kohl’s (KSS) is managed. But the activist investor really stepped up its game on Tuesday, calling the retailer’s management “incapable” of essentially doing anything right. Moreover, “There is a sense of entitlement on the board… combined with complacency.” Macellum was able to make some changes happen last April, so we’ll see what it can do with this latest aggressive round.
International airlines such as Emirates, Air India, All Nippon Airways, and Japan Airlines have all said they’ll cancel flights to the U.S. over 5G fears – an issue national carriers have already expressed extreme reservations about as well. Their collective concern is that the rollout will wreak havoc on airplane instruments.

Then there’s the letter Giant Food President Ira Kress emailed to shoppers. Thanking them for their patience in the current economic environment, he wrote:

As our entire region manages through yet another very challenging period caused by several recent weather events and the ongoing effects of the pandemic, we have experienced significant strain on our supply chain.

It and every other grocery store out there, it seems.

More Non-REIT News

The markets, of course, didn’t have a good day yesterday, with the S&P 500 falling 85.74 points, or 1.84%. The Dow dropped 543.34 points, or 1.51%. And the Nasdaq lost the most of the three major indexes at 2.60%, or 386.86 points – closing at its lowest level since last October.

But even its continuing fall from grace paled in comparison to the 3.07%, or 66.37-point, loss the Russell 2000 experienced. Gold, meanwhile, fell 2.70 points, or 0.15%; and crude oil gained 2.03, or 2.42%.

Analysts blame these actions on the Federal Reserve, which is being criticized across the board these days. That censure is both deserved and hypocritical at the same time.

So many professionals and amateurs alike were all-in on the Fed’s policies when the markets were soaring. But now that the to-be-expected consequences of such are impossible to ignore, they’re voicing their displeasure in no uncertain terms.

Incidentally, as Yahoo Finance noted, “high-growth and technology stocks… are bearing the brunt of the market’s jitters” and probably “have a lot more to worry about” from here. That same article also quotes The Wall Street Journal, which calls out:

… cash-burning technology firms, biotechnology companies without any approved drugs, and startups that listed quickly via mergers with blank-check companies…

It’s like we’re combining the effects of the dot.com bubble with 1970s-level inflation.

Yet Chinese President Xi Jinping told the online Davos conference this week that the Fed shouldn’t change a thing:

If major economies slam on the brakes or take a U-turn in their monetary policies, there would be serious negative spillovers. They would present challenges to global economic and financial stability, and developing countries would bear the brunt of it.

National pressure is probably enough to keep the Fed committed to rate hikes, however.

The World According to REITs

So what do we do about this? After all, as a new Motley Fool report begins, “For most investors, inflation is one of the spookiest words” around.

I was personally sent that writeup yesterday, which I very much appreciate. Its findings support everything I’ve been saying for a very long time now.

Titled “Are Alternative Investments the Best Inflation Hedge? Here’s the Data,” it explores whether gold, wine, art, cryptocurrency, and real estate make for better inflation-beating holdings than stocks.

At 26.89%, the S&P 500’s 2021 return beat inflation’s 7% handily, it found. The same goes for bond, wine, and whiskey indexes, but not art’s 58.81% or bitcoin’s 57%. And cryptocurrency star Ethereum posted a whopping 2,724% gain.

That’s intense!

But the report also noted how many of those alternatives “come with risks and volatility,” not to mention specialized trading fees that eat into profits.

So if you’re a regular market cowboy who can ride a bucking bronco with the best – and have money to burn to boot – then try ‘em out. But if you’re like the vast majority of investors, I’ll point to another of the writeup’s findings:

Since 1980, the S&P 500 has beaten inflation in 28 out of 40 years, bonds have beaten inflation in 32 out of 41 years, and REITs [real estate investment trusts] have beaten inflation in 26 out of 41 years.
Although bonds were slightly more likely to beat inflation than stocks or REITs over that period, bonds generated a smaller return.
Over that period, stocks and real estate had an average annual return of nearly 11%, while bonds saw an average annual return of 7.5%.

Moreover, the S&P 500 did better than bonds 63% of the time (in 41 years), and REITs beat them out about 61%.

More REIT Findings and Updates

Here’s a little more of Motely Fool’s conclusion:

In 1980 and 1981, when inflation was over 10%, REITs beat inflation, while bonds posted positive returns but couldn’t keep up… The S&P 500 posted nearly a 26% return in 1980 and lost 9.73% the following year as inflation persisted.
In short, stocks and real estate can get you through inflationary periods – as long as you hold on – while generating strong returns over the longer term and avoiding the downsides of alternative investments.

REITs are hardly a perfect investment. And you’re almost never going to get rich quick off of them.

But you can use them to get rich nonetheless while protecting your portfolio from the kind of wild swings other investments automatically offer. That’s why I continue to report what I report, including these latest updates from The Daily REITBeat:

Prologis (PLD) announced Q4 core per-share funds from operations (FFO) of $1.12. And its full-year 2022 guidance is for $5.00-$5.10. It added that Q4 occupancy ended up 80 basis points (bps) from Q3 to 97.4%, and its portfolio was 98.2% leased at year’s end.
Whitestone REIT (WSR) named Dave Holeman as CEO to replace the recently terminated James Mastandrea. Mastandrea was also removed as board chairman for the same reasons: violating his employment agreement and failing to live up to company standards. Replacing him there is David Taylor, who was already an independent trustee.
Safehold (SAFE) is taking on the Chicago, Illinois, market by recapitalizing 1000 South Clark, a multifamily building downtown.

Since REITs were fairly active yesterday, there’s another three updates Intelligent REIT Daily subscribers got this morning… a complimentary club you can join as well by signing up today.

(Source: The Daily REITBeat)

Happy Investing

Brad Thomas

467 posts

View all my Posts

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.

The Nasdaq Just Made a “Big” Bear-Market Move

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

A Major Acquisition, Activist Anger, and REITs Are Right Where We Want to Be

Brad Thomas

467 postsJanuary 19, 2022

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A Major Acquisition, Activist Anger, and REITs Are Right Where We Want to Be

467 postsJanuary 19, 2022

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