iREIT Daily

Housing to Head Higher While Employment Lags Intensely

Brad Thomas

467 postsDecember 9, 2021

Let’s see if I can get to everything I want to get to today, starting with what I missed yesterday…

Specifically how luxury home builder Toll Brothers (TOL) doesn’t expect the housing market to cool down next year. It reported earlier this week that it foresees 20% revenue growth for its fiscal 2022.

That was after it reported quarterly adjusted earnings of $3.02 per share – more than $0.50 higher than the expected $2.49. And revenue rose 18.2% to $2.95 billion year-over-year.

I guess that makes Elon Musk just as unique as ever considering how he sold his Silicon Valley home this week for $30 million. He’s now officially fulfilled on last year’s promise to “own no home” while so many others scramble to find houses.

Also unique is how the larger housing craze coincides with such an abysmal employment situation. The U.S. economy had a record 11.1 million job openings – jobs that need to be filled and are not yet – which only dropped to 11 million by the end of October.

Here’s a snippet from Yahoo Finance’s “Morning Brief”:

Data from the Bureau of Labor Statistics released Wednesday confirmed the persistence of hiring difficulty for America’s employers. From restaurants to retail, industries across the economy continue to operate with fewer workers than pre-pandemic levels…
“No employer is in a celebratory mood. It is difficult to fill orders or meet customer demands if there are not enough people to do the actual work,” said BMO Capital Markets Senior Economist Jennifer Lee.

That makes Kellogg’s (K) worker situation even more problematic. After over two months of 1,400 employees striking amidst failed negotiations, it says it has “no choice but to hire permanent replacement employees.”

But how easily can it do that? I’m not that optimistic, and I doubt management is either.

Lack of Employees Leads to Inflation, and Amazon Gets Slapped With an Italian Fine

The employee shortage isn’t helping lower inflationary pressures either. At the risk of stating more of the obvious, I’m going to quote another Yahoo Finance article, this one saying that:

The continuous labor shortage is weighing down potential economic growth, a new report from ING (ING) found.
“Labour supply simply isn’t returning quickly enough; and for companies desperate to hire, this is a huge problem,” the report noted. “The implication is that it constrains growth and pay is bid higher, with those cost increases likely passed onto consumers.”
The report examined last month’s job report and placed some of its numbers in a larger context. Payrolls rose by 210,000, well under the 550,000 consensus estimates. According to the report, “U.S. employment is still [$3.9 million] below pre-Covid levels.”

It added that “There is absolutely no problem with demand. The issue is the lack of workers to hire, with the labour participation rate remaining woefully low at 61.8%.”

It’s those inflationary factors that has the Federal Reserve saying it will raise rates in Q3-22 – ahead of previous guidance given just a month ago.

Moving over to the U.K., Prime Minister Boris Johnson announced that office employees have to start working from home again. He also mandated face masks in most public indoor areas, as well as vaccine passports to attend nightclubs and similar public venues.

Just in time for Christmas too.

Then, over in Italy, the government just fined Amazon (AMZN) €1.13 billion, or $1.3 billion, for market dominance abuse. U.S.-based big tech companies in general are facing elevated attention across the continent.

And it’s not of the flattering variety. This move is just the latest regulatory action against them, though admittedly a very hefty one.

The World According to REITs

One last continental jump before we get to real estate investment trusts (REITs), this time to Japan. Toyota (TM) had to pause production at two factories thanks to – you guessed it – national supply shortages along with labor issues elsewhere.

According to Reuters, it had hoped to return to normal productivity this month. But the three-day break it’s now enacting will likely translate into a 3,500-vehicle shortfall for December.

Nonetheless, it maintains it can keep its full financial-year goal of nine million vehicles.

Now on to REITs, where we have just three updates today according to The Daily REITBeat:

Agree Realty (ADC) priced a 5 million share public offering at $68.15 per to raise $340.75 million in gross proceeds. It expects to use any resulting net proceeds for general corporate purposes, including property acquisitions and developments.
UMH Properties (UMH) signed a joint venture agreement with Nuveen Real Estate to develop or purchase manufactured housing communities. UMH will have a 40% stake but serve as both managing and operating member of the project.
Simon Property Group (SPG) appointed Peggy Fang Roe to its board as an independent member.

Because those were the only reports to share this morning, I’m featuring the same three in today’s Intelligent REIT Daily. But that’s not usually the case.

Usually, there’s plenty to go around when it comes to keeping you up to date about our commercial real estate sphere – not to mention the additional evaluations and other important resources I highlight there.

That’s why I highly recommend you sign up for this free resource today!

(Source: The DailyREITBeat)

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.

The Most Ugly Sweater of All

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

Housing to Head Higher While Employment Lags Intensely

Brad Thomas

467 postsDecember 9, 2021

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Housing to Head Higher While Employment Lags Intensely

467 postsDecember 9, 2021

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