iREIT Daily

Landlord Losses Mount

Brad Thomas

467 postsAugust 23, 2021

Most news sources covered the latest chapter of the eviction moratorium story over the weekend. But through luck of the draw, I’ll be quoting NBC News and Yahoo Finance.

First, the backstory: that group of landlords I reported on earlier this month had their case decided on – and dismissed – by the U.S. Court of Appeals for the District of Columbia Circuit.

That means the landlords had the choice of giving up or taking it to the Supreme Court.

And they chose the latter, which brings me to the NBC article from Friday:

“The landlords… may face better odds with the Supreme Court. At least five of the justices have indicated their skepticism that the CDC has the proper authority [to impose the eviction moratorium]…
“The first moratorium applied to renters nationwide, while the revised version applies only in counties with a high rate of Covid transmission. Government lawyers conceded, however, that at least 80 percent of the nation’s counties are in that category.”

And then there’s Yahoo Finance’s peace from Sunday: “‘Absolutely Nothing We Can Do:’ Landlords, Tenants Struggle as ‘Half-Measure’ Moratorium Pleases None.”

“The federal eviction moratorium, which has allowed struggling renters swamped by the fallout from Covid-19 to remain in their homes but left landlords mostly on the hook for unpaid rent, is starting to draw more fire from both camps.
“As the Delta variant drives a resurgence of cases across the country, landlords and tenants alike are speaking out about the shortcomings of the moratorium, which hasn’t resolved the fundamental issue of tenants unable to pay back rent – or property owners who aren’t getting paid and are drowning in mounting costs.”

It goes on to remind readers how, “Some 6.5 million households are behind on rent, according to U.S. Census Bureau data.”

What REITs Don’t and Do Need to Worry About

Before you worry too much about our real estate investment trusts (REITs), don’t. Not in this regard, anyway. As usual, it’s the little guys paying the price. Nearly 72% of those late on rent owe:

“… smaller ‘mom and pop’ landlords. That demographic is arguably one of the biggest losers in the current crisis, with the moratorium neither providing them financial relief nor facilitating payments of the billions owed in back rent.”

And Yahoo Finance adds:

“Yet many of the headaches could have been avoided if billions of dollars that Washington allocated to help struggling tenants pay their rent had actually reached them. Treasury Department data shows that only a fraction of nearly $50 billion in federal aid has actually trickled down to tenants and landlords, mired in overwhelming demand, and state and local infrastructure incapable of handling the load.”

Then again, there are also some delinquent tenants who are milking the system for all it’s worth.

This mentality further shows in the fact that two Chick-fil-A locations have had to close their inside dining – and not because of Covid. Instead, they’re struggling that badly to find workers.

Normally, I wouldn’t bother mentioning a mere two locations’ woes. But what the one posted on Facebook on Saturday is unfortunately true on a much larger scale:

“We, along with many businesses, are in the middle of a hiring crisis. We are doing everything we can to hire more team members. We are seeing far less job applicants or people not showing up for their interviews. The restaurant industry has suffered from a hiring perspective during the pandemic, and unfortunately, Chick-fil-A is not immune to this labor shortage.”

Naturally, that’s not good news for many a retail REIT.

The World According to REITs

There’s less-than-desirable news for office REITs too, as some tenants consider keeping their work-from-home policies in place for two years.

Two years!

Fortunately, office REITs usually operate with long-term leases. But even so, this kind of decision can easily affect lease renewals and negotiations as they come up.

I’ll obviously report on such details as they unfold. In the meantime, here’s the latest data to come out about the larger sector:

Pebblebrook Hotel Trust (PEB) published an update that “operating trends improved weekly through early August. However, recent weeks reflect a slowdown in overall demand due to multiple factors.” That includes the return of school (and therefore the end of the summer) and also reports of heightened Covid-19 numbers. PEB added that its properties were 50% occupied for the week ending August 15.
City Office REIT (CIO) signed a definitive agreement to sell its entire Sorrento Mesa (San Diego, California) portfolio. The sale will close in two parts, first in December and then in February. And the $576 million price tag should generate initial net proceeds of about $546 million.
Starwood Real Estate Income Trust reaffirmed its previous recommendation for Monmouth Real Estate Investment (MNR) shareholders to reject Equity Commonwealth’s (EQR) takeover bid at the end of the month.

In other news…

(Source: The Daily REITBeat)

And the MSCI U.S. REIT Index last week showed a 0.4% decline, which was still better than the S&P’s 0.6% fall. Year-to-date, the sector is still smashing it, up 27.5% compared to the S&P 500’s 19.4% rise.

Leading that charge last week, data centers were up 2.3%, storage gained 2%, and industrials added on 1.1%. What dragged the larger category down, however, were:

Malls, down 3.9%
Lodging/gaming, down 3.3%
Shopping centers, down 2.5%.

And for those of you who want even further insights, I’ll add that the most-shorted REITs definitely fell in those three categories. I’m talking about Pennsylvania Real Estate Investment Trust (PEI), Tanger Factory Outlet Centers (SKT), Seritage Growth Properties (SRG), Washington Prime Group (WPG), and Agree Realty (ADC).

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.

Dividend Growth Stock of the Week: Sempra

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

Landlord Losses Mount

Brad Thomas

467 postsAugust 23, 2021

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Landlord Losses Mount

467 postsAugust 23, 2021

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