iREIT Daily

A Very Different Analysis of Yesterday’s Action

Brad Thomas

467 postsDecember 21, 2021

I was listening to a Yahoo Finance video from yesterday, and I have to give the guest commentator props. Everyone else is talking about how investors are spooked by the omicron variant. But Heritage Capital President Paul Schatz has a different take:

“As you know, there always has to be this assigning of blame. Blame and credit. Blame and credit. So Omicron is the easiest thing to blame on the market selloff. But when you look at the sectors and you look at what’s declined, not just in one day but over the last couple of days… the work-from-home stocks aren’t exactly lighting the world on fire, which – if this was really about Omicron – you’d see a complete bifurcation of the market. You don’t see that now. The selling has been broad-based today, and it was disappointingly broad-based on Friday.”

The selloff, Schatz concluded easily, is only about the Federal Reserve’s tapering decisions and 2022’s likely trajectory.

In short, “there’s going to be less money in the system.” And investors are reacting accordingly – or at least how they think is accordingly. There are plenty of fundamentally sound stocks they’re foolishly throwing out with the bathwater.

Like I said, I have to give the guy props. He eloquently stated what I didn’t bother to write yesterday, since I felt as if I’d just be boringly repetitive.

I still maintain that the markets’ initial bullish reaction to the Fed announcement earlier this month doesn’t track with his (and my) larger analysis. But who knows. There could be a logical reason for that too.

More Market Talk Apart From REITs

When asked whether investors should worry about Omicron at all when selecting stocks, Schatz replied:

“… absolutely, positively not. Omicron is, if you look at all the charts from all the quants, it’s happening much faster. We’ve got on a percentage basis less hospitalizations [and] a lot lower death rate.”

He’s not “trying to minimize the health crisis, but from a market perspective, Omicron is going to be fleeting.” And he’s a long-term-minded kind of guy.

With that said, he does have some 2022 predictions, such as:

Tech stocks won’t be the sure things they have been.
Expect to see “massive sector rotation in early 2022.”
The larger stock market will decline.
GDP growth will disappoint.
Inflation will come down.
Short-term bonds should do well.

None of that has anything to do with Biden’s Build Back Better bill failing or passing, in his opinion:

“I can’t believe someone like Goldman Sachs went to sleep on Friday with this really bullish view for 2022. And because Build Back Better didn’t pass… all of a sudden they woke up and they downgraded on Monday.”

I think those are all pretty good points.

Meanwhile, Moderna (MRNA) announced that its Covid-19 booster shot is seeing positive results against Omicron. And the Biden administration raised fuel-efficiency standards for automakers.

By 2026, new U.S. vehicles will have to run at 55 miles per gallon.

I’m not sure if now is the best timing for that 12-mpg increase (over the Trump administration’s set standard for said year). The industry is, after all, already dealing with severe production issues thanks to the global semiconductor chip shortage.

But the move is allegedly to combat higher gas prices for consumers’ sake – which isn’t a positive commentary on where the U.S. powers-that-be expect oil prices to be going forward.

The World According to REITs

The one consolation I can give on that is how we could have it worse. We could be Turkey.

Its lira fell to an all-time low against the euro to start out the week. And its economy could reportedly collapse altogether if something doesn’t change.

President Recep Tayyip Erdogan is trying to tame inflation without raising interest rates. And while there’s always hope until there isn’t… things just aren’t looking good for that goal right now.

In short, I wouldn’t be putting my money into that country right now. In much better straits are the following real estate investment trusts (REITs). They’re still actively seeking expansion with moves like the following:

CTO Realty Growth (CTO) purchased a 28,000 square-foot property in an Orlando, Florida, suburb for $13.2 million. It’s anchored by Synovus, with the third floor still in need of a tenant. And CTO will open a new office there as well sometime in H1-22.
Cousins Properties (CUZ) signed on Amazon (AMZN) to its entire Domain 9 development in Austin, Texas – a 330,000 square foot space. It also signed two leases at its 90%-owned 100 Mill office development in Tempe, Arizona. That property, to be opened in H1-22, is now 80% pre-leased.
Four Corners Property Trust (FCPT) acquired three properties triple-net leased to investment-grade banks in Illinois for $5.4 million. They have nine years left to their contracts with annual rent raises of 1.5%, and came with a 6.5% going-in capitalization rate.

That latter REIT is certainly into acquisitions these days. Then again, the larger sector seems bent on making something of these waning days of 2021.

I mention three more of these updates at Intelligent REIT Daily, which you can sign up for here.

Oh, and prepare to do a double-take when you see the first figure below. Believe it or not though, it’s not a typo.

You can check for yourself.

(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.

A Famous Musician’s Comments Against NFTs

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 Very Different Analysis of Yesterday’s Action

Brad Thomas

467 postsDecember 21, 2021

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