iREIT Daily

Analyzing the Earnings That Keep Coming In

Brad Thomas

467 postsOctober 27, 2021

I was in the grocery store yesterday, and it felt like 2020 (or 1984?) all over again.

The toilet paper section was exceptionally depleted, with signs saying customers were only allowed one purchase per day. And the pre-packaged deli meat display was completely bare.

There was nothing on it whatsoever.

Bread, apparently, is still being produced and shipped aplenty. But the dairy aisle was much less well-stocked than normal.

In addition, choose any aisle. What is there is bound to be more expensive. You’ve no doubt already recognized this months and months ago, but the cost of existing hasn’t exactly improved.

CBS quotes American Farm Bureau Federation Senior Economist Veronica Nigh as saying that food prices are up 3.7% – so far – in 2021. Compare that to the 20-year average of 2.4%.

The news source continues, “As a result, the overall tab for turkey and all the trimmings will cost 4% to 5% more than year than a year ago.” Again, if you can find them in the first place.

It then adds the absolutely obvious: that “several factors are combining to drive up food prices, including labor shortages, higher transportation costs, and supply-chain disruptions.”

None of that’s bothering Microsoft (MSFT), however, which reported fiscal Q1-22 earnings yesterday. Revenue rose $45.3 billion, solidly over the expected $43.93 billion analysts expected. And earnings per share (EPS) were $2.71, $0.64 better than forecasted.

Sure, there’s the global chip shortage going on that’s limiting its computer sales. But its cloud revenue is more than making up for it.

In fact, tech firm and information analyst Refinitiv reports that of the S&P 500 companies to report so far… over 80% have topped Wall Street’s estimates. Normally, that figure would be about 66%.

So is it just the little guys who are suffering?

A Little More Market Information to Be Mindful Of

Yahoo’s Morning Brief today is titled, “Q3 Earnings Are Surprising to the Upside, But…” And after citing the aforementioned Refinitiv report, it notes that “companies are doing better than expected.”

Which begs the question of, “what’s going on?” Here’s its answer:

“Over at Deutsche Bank, chief equity strategist Binky Chada recently crunched the Q3 numbers, and found some noise in otherwise strong results. As it turns out, the stellar performance of big banks was largely attributed to the release of loan-loss reserves that Wall Street thought it needed to cushion the blow of Covid-19.
“If you exclude those factors, the headline outperformance of S&P 500 companies in aggregate during Q3 is running at a comparatively tame 8%, well below the current levels over 80%. The median results are even less impressive, checking in at 5.2%.”
“‘At the moment, our team sees earnings on track to being flat to down sequentially by -0.2% to -2% [quarter-over-quarter, seasonally adjusted in Q3], marking the first drop since Q2 2020,’ Deutsche Bank economist Jim Reid wrote this week.”

That financial force also brought up how bank estimates of sales growth slowed immensely last quarter. It sees margins dropping from here thanks to such things as rising inflation and energy.

As for the larger article, it ends like this:

“‘Forward consensus estimates have risen modestly, but mostly due to higher oil prices. Excluding energy, estimates for [the fourth quarter] and 2022 are down slightly,’ Reid said.
“All told, it means the economy – and corporate America – isn’t out of the woods just yet. Keep one eye on Q3 earnings, but the other on guidance for Q4 and the upcoming calendar year.”

Exactly what I’ve been saying.

The World According to REITs

Yesterday, we had reports from Digital Realty Trust (DLR), Hersha Hospitality (HT), and Ashford Hospitality Trust (AHT).

And Hudson Pacific Properties (HPP), Retail Opportunity Investments (ROIC), Four Corners Property Trust (FCPT), and Boston Properties (BXP).

And Eastgroup Properties (EGP), Equity Residential (EQR), UDR (UDR), and American Assets Trust (AAT).

And Acadia Realty Trust (AKR), Essex Property Trust (ESS), Highwoods Properties (HIW), and Whitestone REIT (WSR).

But wait! There’s more! Because five other real estate investment trusts (REITs) made non-earnings announcements as well.

I can’t cover them all here. But those of you who signed up for my free e-letter, Intelligent REIT Daily, get details on three more.

I’m not pushing this just to push it. This really is the time to be aware, as more and more data releases and expert evaluations are showing.

So, on that note, without further ado:

Digital Realty raised its 2021 funds from operations (FFO) guidance from $6.45-$6.50 per share to $6.50-$6.55. Naturally then, its Q3 report didn’t disappoint, with FFO of $1.65. The bookings it signed should generate $113 million of annualized rental revenue. And renewal leases represented $223 million.
Four Corners recorded $0.39 per share in FFO, exactly as expected. Revenue was $50.71 million compared to $42.97 million in Q3-20. And the company received 99.8% of rent due for the quarter. It also acquired 53 new properties at $107.4 million and issued over 1 million common shares through its at-the-market (ATM) program.
Hersha did better than expected with FFO of $0.11 per share instead of $0.06. Its 33 comparable-hotel portfolio saw 60.3% occupancy in Q3 with an average daily rate of $230.92. Specifically, its New York properties’ average daily rates rose from $176 at the beginning of the period to $207 at the end. And they should prove to be cash-flow positive through Q4.
Whitestone reported $0.25 in per-share FFO, with same-store net operating income (NOI) rising 7%. Annualized base rent per leased square foot grew from $19.95 to $20.41 quarter-over-quarter. And it signed 38 new leases with 65 renewals in the three months. At quarter’s close, the company had $10.9 million in cash and cash equivalents.

We’ll see if those results from yesterday push up any of the figures below 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 Happiest Place on Earth

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

Analyzing the Earnings That Keep Coming In

Brad Thomas

467 postsOctober 27, 2021

Featured Articles

The Great Housing Market Migration Is VERY Interesting

Let Dividends Help You Deal With Disappointment In The Stock Market

Amazon Wants to Ask What Ails You

Wall Street’s Workforce Crisis Should Be Taken Seriously

Santa Claus Has Left the Building

Analyzing the Earnings That Keep Coming In

467 postsOctober 27, 2021

REIT Mutual Funds

REIT ETFs

Not All Dividends Are the Same